CS Professional · Strategic Management and Corporate Finance · Competitive Positioning
Which of the following best describes a 'cost leadership' generic strategy as proposed by Michael Porter?
Cost leadership means becoming the lowest-cost producer in the industry and serving a broad market with products of acceptable quality. Premium pricing reflects differentiation and narrow segment targeting reflects focus, so they are different generic strategies.
- ACharging premium prices for uniquely differentiated products
- BBecoming the lowest-cost producer in the industry while offering products of acceptable quality to a broad marketCorrect
- CServing only a narrow buyer segment with specialised products
- DMerging with competitors to reduce the number of players
Explanation
Porter's cost leadership aims at the lowest cost position across a broad market through scale, efficiency and cost control, while maintaining acceptable quality. Premium pricing with uniqueness is differentiation, and narrow segment targeting is focus.
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