CS Professional · Strategic Management and Corporate Finance · Competitive Positioning
Which of the following best describes a firm that pursues a cost leadership strategy in Porter's generic strategies framework?
Cost leadership in Porter's framework means serving a broad market while achieving the lowest cost in the industry. A narrow-segment low-cost approach is cost focus, and premium pricing for unique features is differentiation, so those options are wrong.
- AIt targets a broad market and aims to become the lowest-cost producer in the industryCorrect
- BIt targets a narrow segment and offers a highly unique product at a premium price
- CIt targets a broad market and charges a premium for distinctive features
- DIt targets a narrow segment and competes only through the lowest cost
Explanation
Cost leadership means a broad market scope combined with the lowest cost position in the industry, allowing price advantage or higher margins. The option about a narrow segment with lowest cost describes cost focus, and the premium-price options describe differentiation or differentiation focus.
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