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CMA Intermediate · Operations Management and Strategic Management · Strategic Analysis and Strategic Planning

Tarini Foods sells packaged snacks at the lowest price in its region because it runs very large plants, buys raw material in bulk and controls overhead tightly. According to Porter's generic strategies, which strategy is Tarini Foods following?

Tarini Foods follows cost leadership. Its large plants, bulk purchasing and tight overhead control give it the lowest cost in the region, which lets it price lower than rivals. Differentiation relies on uniqueness and focus on a narrow segment, neither of which is described.

  1. ACost leadershipCorrect
  2. BDifferentiation
  3. CFocus on a niche segment
  4. DStuck in the middle

Explanation

Cost leadership means achieving the lowest cost in the industry through scale, bulk buying and tight cost control, and then offering competitive prices. Tarini's large plants, bulk purchasing and overhead control are classic cost leadership sources. Differentiation would rely on unique features or brand value rather than low cost.

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