CA Intermediate · Financial Management and Strategic Management · Strategic Choices
Rohan Foods has a strong brand but faces intense price competition in packaged snacks. It decides to offer snacks of distinctly higher quality and unique flavours, accepting higher costs and charging a premium that customers willingly pay. According to Porter's generic strategies, this is:
This is a differentiation strategy. The firm offers unique, higher-quality snacks and charges a premium that customers accept. Cost leadership seeks the lowest cost, cost focus targets a narrow segment on cost, and retrenchment is not a generic strategy, so they do not apply.
- ADifferentiationCorrect
- BCost leadership
- CCost focus
- DRetrenchment
Explanation
Offering unique, higher-quality products to a broad market at a premium price is differentiation. Cost leadership would aim at the lowest cost and price. Cost focus targets a narrow segment on cost basis, and no narrow segment is mentioned. Retrenchment is a grand strategy, not a generic strategy.
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