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CMA Final · Entrepreneurship and Startup · Value Addition

A startup selling handloom fabrics online decides to move from selling plain fabric to offering designer stitched garments with made-to-measure service. Which strategic benefit is most directly linked to this move up the value chain?

The most direct benefit is reduced exposure to price competition. Customised designer garments are differentiated from plain fabric, so customers value design and service, not just price, which supports higher margins for the startup.

  1. ALower exposure to price competition because differentiated, customised products support higher marginsCorrect
  2. BAutomatic elimination of all working capital needs
  3. CGuaranteed reduction in the number of competitors in the fabric market
  4. DExemption from quality standards applicable to garments

Explanation

Moving to customised garments differentiates the offering, so customers compare on design and service rather than only price, supporting better margins. It does not remove working capital needs, and it does not reduce competitors in the fabric market. Quality expectations typically increase rather than disappear.

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