CFA Level I · CFA Level I Exam · Business Models
A company positions its products as the lowest-priced in its market and focuses on high volume and tight cost control. Which value proposition is it most likely pursuing?
The company is most likely pursuing cost leadership. It competes by offering the lowest prices, supported by high volume and tight cost control. Differentiation instead relies on distinctive quality or features that justify a premium price, and a niche focus targets a narrow, specialized segment.
- ADifferentiation based on premium quality
- BNiche focus on a specialized customer segment
- CCost leadershipCorrect
Explanation
Competing on the lowest price through high volume and cost control is a cost leadership proposition. Differentiation relies on distinctive features or quality commanding a premium, and a niche focus targets a narrow segment.
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