ACCA Applied Knowledge · Business and Technology · Competitive factors
Norvik Ltd sells basic kitchen appliances in a mass market. It has invested in large-scale plants and strict cost control so that it can charge lower prices than all rivals while still earning acceptable margins. Which generic strategy is Norvik following?
Norvik is following cost leadership. It serves a broad mass market and achieves the lowest cost through scale and tight cost control, allowing lower prices with acceptable margins. Cost focus would apply only if it targeted a narrow segment.
- ACost focus
- BDifferentiation
- CCost leadershipCorrect
- DDifferentiation focus
Explanation
Norvik targets a broad mass market and competes by having the lowest costs, using economies of scale and cost control. That is cost leadership. Cost focus would require a narrow market segment.
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