ACCA Strategic Professional · Strategic Business Leader · Environmental issues
Norvale Foods operates in a packaged soup market where volume growth has fallen to 1% a year, customers are well informed, capacity exceeds demand and rivals compete mainly on price. Norvale's board asks which strategic priority best fits the industry life cycle stage. What is the most appropriate priority?
Norvale should reduce costs, rationalise its range and defend share. Slowing growth, excess capacity and price-based rivalry mark a mature industry, where efficiency and protecting position matter most. Awareness building and capacity expansion suit earlier stages, and full withdrawal is premature without evidence of decline.
- AInvest heavily in building awareness among first-time buyers
- BReduce costs, rationalise the range and defend market shareCorrect
- CRace to expand capacity to meet surging demand
- DHarvest fully and withdraw from the market immediately
Explanation
Slow growth, overcapacity and price competition indicate maturity. In maturity, firms focus on cost efficiency, product rationalisation, defending share and selective differentiation. Building awareness suits introduction, capacity expansion suits growth, and immediate withdrawal is a decline-stage option not justified here.
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