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

Kaveri Mills, an Indian packaged-snacks manufacturer, decides to sell plain, standard products across the whole country at the lowest cost in the industry. It relies on large-scale plants, tight control of overheads and bulk purchasing of raw materials, and prices slightly below rivals. Which of Porter's generic strategies is Kaveri Mills following?

Kaveri Mills is following cost leadership. It serves a broad national market with standard products and wins by having the lowest cost base, using scale, overhead control and bulk purchasing, which lets it price slightly below rivals.

  1. ADifferentiation
  2. BCost leadershipCorrect
  3. CCost focus
  4. DDifferentiation focus
  5. Stuck in the middle

Explanation

The firm targets a broad market, offers standard products and competes by having the lowest cost base through scale, overhead control and bulk buying. That is cost leadership. Focus strategies would require a narrow segment, and differentiation would rely on perceived uniqueness rather than low cost.

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