CMA Final · Entrepreneurship and Startup · Value Addition
A startup selling handmade furniture online decides to offer free assembly, a five-year service guarantee and customised sizing, without changing the physical product. Which type of value addition does this primarily represent?
This is service-based differentiation. By adding free assembly, a long guarantee and customised sizing around an unchanged product, the startup improves customer experience and perceived worth, without lowering cost through scale, integrating its supply chain or entering unrelated products.
- ACost leadership through scale economies
- BService-based differentiation that enhances customer experienceCorrect
- CVertical integration of the supply chain
- DDiversification into unrelated products
Explanation
The product is unchanged; the firm adds assembly, guarantee and customisation around it. These are service and experience enhancements that differentiate the offer. No scale cost advantage, ownership of the supply chain or new product line is involved.
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