ACCA Applied Knowledge · Business and Technology · Competitive factors
Which of the following is most likely to be a source of cost advantage for a cost leader?
Economies of scale from high-volume production is a typical cost leadership source because it lowers unit costs. A strong brand with premium pricing and unique niche features relate to differentiation or focus strategies, not to cost advantage.
- AEconomies of scale from high-volume productionCorrect
- BA strong brand allowing premium pricing
- CUnique product features aimed at a niche
Explanation
Cost leaders gain advantage from lower unit costs, typically through economies of scale, learning effects and efficient processes. Premium pricing from branding and unique niche features are sources of differentiation or focus advantage.
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