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CMA Intermediate · Operations Management and Strategic Management · Introduction to Strategic Management

A firm's business strategy is differentiation based on superior quality. Which functional-level decision is most consistent with supporting this strategy?

Investing in tighter quality control and training skilled workers best supports a quality-based differentiation strategy, because functional strategies must implement the business-level strategy. Cost-cutting on inspection or inputs conflicts with it, and entering unrelated businesses is a corporate-level decision rather than a functional one.

  1. AInvesting in tighter quality-control systems and skilled workforce trainingCorrect
  2. BCutting inspection staff to reduce unit cost
  3. CSwitching to the cheapest available raw material
  4. DAdding new unrelated businesses to the portfolio

Explanation

Functional strategies must align with and implement the business strategy. A quality-based differentiation needs strong quality systems and skills. Cutting inspection or using cheapest inputs contradicts it, and adding unrelated businesses is a corporate-level matter.

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