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ACCA Applied Knowledge · Business and Technology · Technological factors

A manufacturer is considering whether to adopt a new production technology that few rivals have yet used. The technology is expensive but would let it make a product of clearly higher quality at the same cost as competitors. Which of the following best describes the strategic advantage the manufacturer could gain?

The manufacturer could gain differentiation, because the technology yields clearly higher quality that rivals cannot easily match at first. It is not cost leadership, since costs equal competitors', and nothing suggests a narrow segment focus or vertical integration.

  1. ADifferentiation based on a product that competitors cannot easily match in the short termCorrect
  2. BCost leadership based on lower unit costs than competitors
  3. CFocus on a narrow market segment
  4. DVertical integration of its supply chain

Explanation

Higher quality at similar cost points to differentiation, in Porter's terms. Cost leadership would need lower unit costs, which the scenario excludes as costs equal rivals'. Nothing indicates a narrow segment focus or integration with suppliers. The temporary lead exists because few rivals have the technology.

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