CFA Level I · CFA Level I Exam · Industry and Competitive Analysis
A analyst studies a company that sells a standard commodity-like product in a market where buyers compare prices easily. The company's strategy is to become the lowest-cost producer in its industry through scale and tight cost control. This strategy is best described as:
The strategy is cost leadership. The company aims to be the lowest-cost producer using scale and cost control, which suits a market where buyers compare prices easily. Differentiation would rely on unique features and premium pricing, and focus would target a narrow segment.
- ACost leadershipCorrect
- BDifferentiation
- CFocus on a niche
Explanation
A strategy built on being the lowest-cost producer through scale and cost control is cost leadership in Porter's generic strategies. Differentiation relies on unique features that support premium prices, and focus targets a narrow segment, neither of which is described.
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