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ACCA Strategic Professional · Strategic Business Leader · Environmental issues

Brelmont plc sells tinned vegetables in a market where volume growth has stalled, products are almost identical, and buyers are very price sensitive. Several weaker producers are leaving and the remaining firms compete mainly on cost and brand. Which strategic implication best fits the industry stage?

In a mature market with stalled growth, similar products and price-sensitive buyers, the firm should focus on cost reduction, defending share and possibly acquiring exiting rivals' capacity. Heavy innovation or awareness building suits earlier stages, and price rises with expansion would be unwise given overcapacity.

  1. AInvest heavily in basic research to create new product categories before rivals
  2. BFocus on cost reduction, defending market share and possibly acquiring exiting rivals' capacityCorrect
  3. CRaise prices sharply to fund rapid capacity expansion
  4. DConcentrate on building initial customer awareness of the product concept

Explanation

Stalled growth, standardised products and shake-out indicate maturity. Typical responses are cost efficiency, share defence, and selective consolidation. Heavy R&D and awareness building suit earlier stages, and sharp price rises with expansion ignore price-sensitive buyers and overcapacity.

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