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IAI Actuarial Core Principles · Business Management · Strategy, competitive advantage, strategic decision process and PEST analysis

Kaveri Bazaar, an Indian grocery chain, deliberately keeps its operating costs lower than every rival through bulk procurement, standardised store formats and tight inventory control. It sells mainstream products to the whole market at prices slightly below competitors. Which of Porter's generic strategies is Kaveri Bazaar following?

Kaveri Bazaar is following cost leadership. It serves a broad market and builds its advantage on having the lowest operating costs through bulk buying, standard formats and inventory control, which lets it price below rivals while still earning acceptable margins.

  1. ACost leadershipCorrect
  2. BDifferentiation
  3. CCost focus
  4. DDifferentiation focus
  5. Stuck in the middle

Explanation

The firm targets a broad market and gains advantage from the lowest cost base, passing some savings on in price. This is Porter's cost leadership. Focus strategies would require a narrow segment, which is not present here, and differentiation relies on uniqueness rather than cost.

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