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

Kaveri Health Insurance, a standalone health insurer, decides to compete by offering the fastest cashless claim approval among private insurers in metro cities, rather than by being the cheapest. Which level of strategy and which generic approach does this choice most closely reflect?

This is business-level competitive strategy using differentiation. The insurer chooses to stand out on claim approval speed instead of price, so it seeks advantage through a distinctive benefit. It is not cost leadership, and diversification, integration and divestment are corporate-level choices.

  1. ACorporate strategy, using cost leadership
  2. BBusiness (competitive) strategy, using differentiationCorrect
  3. CFunctional strategy, using diversification
  4. DOperational strategy, using vertical integration
  5. Corporate strategy, using divestment

Explanation

How a single business competes in its market is business-level, or competitive, strategy. Offering superior claim speed instead of the lowest price is differentiation. Cost leadership would rely on being the lowest-cost producer, and diversification, integration and divestment are corporate-level moves.

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