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ACCA Strategic Professional · Strategic Business Leader · Strategic choices

Brightwater Airlines flies a single type of aircraft on point-to-point routes, uses secondary airports, sells only online and charges for all extras. It targets price-sensitive travellers across many routes. Which of Porter's value chain-based sources of advantage best explains how it sustains its generic strategy?

Brightwater's advantage comes from cost leadership achieved by configuring its whole value chain for low cost. A single aircraft type, secondary airports, online-only sales and charged extras reduce costs in operations, procurement and distribution, allowing low prices to a broad price-sensitive market.

  1. ACost advantage from configuring the whole value chain, including operations, procurement and distribution, to lower costs relative to rivalsCorrect
  2. BDifferentiation advantage from superior inbound logistics and premium after-sales service
  3. CFocus advantage from serving a single narrow customer segment
  4. DAdvantage from raising switching costs through exclusive supplier contracts

Explanation

Single aircraft type, secondary airports, online-only sales and charged extras all reduce costs across several value chain activities. This is a cost leadership strategy built on configuring the value chain. Differentiation and focus do not fit, as the firm serves price-sensitive customers across many routes.

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