CA Intermediate · Financial Management and Strategic Management · Strategic Choices
Sundaram Textiles, a mid-sized Indian fabric maker, decides to be the lowest-cost producer in the entire industry and sells standard fabrics to a broad range of buyers across the country. Under Porter's generic strategies, which strategy is it following?
Sundaram Textiles is following a cost leadership strategy. It aims to be the lowest-cost producer in the whole industry and serves a broad market with standard products, rather than a narrow segment or unique features, which would indicate focus or differentiation.
- ADifferentiation
- BCost leadershipCorrect
- CFocus with cost advantage
- DStuck in the middle
Explanation
Cost leadership means aiming to be the lowest-cost producer across a broad market. Sundaram targets a wide buyer base with standard products, so it is not focusing on a narrow segment. Differentiation would rely on unique features, which is not described.
Did you get it right without looking?
One question tells you little. A timed set on Strategic Choices shows your real accuracy, how long you take and where you lose marks.
More Strategic Choices questions
- Arjun Motors is a diversified group. Its management decides to sell its loss-making hotel division to another company so that it can concent…
- A BCG matrix analysis of Kaveri Foods shows a product with low relative market share in a high-growth market that consumes heavy cash. Manag…
- A business unit of Bharat Auto Components operates in a low-growth industry and holds a low relative market share, yet generates modest cash…
- Kalyani Foods, a packaged snack maker, buys the company that supplies it with potato chips raw material so that it controls the quality and …
- A listed Indian conglomerate has a division making consumer batteries. The division has a low relative market share in a market growing slow…
- A cement company with a large market share in a slow-growing market uses a BCG matrix. One of its product lines has high relative market sha…