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NISM Certifications · NISM-Series-XV: Research Analyst · Company Analysis - Business and Governance

Which of the following is an example of a company's use of a 'cost leadership' generic strategy?

Cost leadership means becoming the lowest-cost producer in the industry through economies of scale, operating efficiency and tight cost control, while selling at or near market prices. Premium branding and frequent variants are differentiation, and niche targeting is a focus strategy.

  1. AAchieving the lowest unit cost in the industry through scale and efficient operations while pricing at or near the marketCorrect
  2. BCharging a premium price for a uniquely branded product
  3. CServing only a narrow niche of luxury customers
  4. DLaunching frequent new product variants to appeal to different tastes

Explanation

Porter's cost leadership means becoming the lowest-cost producer via scale, efficiency and tight cost control. Premium branding and variants are differentiation, and serving a narrow segment is focus strategy.

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