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Question 318 - CSCP discussion

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Which of the following types of competitive strategies most likely will be effective for an industry in which the product is a standardized commodity?

A.
Low-cost leadership
Answers
A.
Low-cost leadership
B.
Best-cost provider
Answers
B.
Best-cost provider
C.
Broad differentiation
Answers
C.
Broad differentiation
D.
Focused differentiation
Answers
D.
Focused differentiation
Suggested answer: A

Explanation:

In an industry where the product is a standardized commodity, the most effective competitive strategy is often low-cost leadership. Standardized commodities are typically undifferentiated products, so the key competitive advantage comes from being able to produce and sell at the lowest cost. This strategy focuses on achieving cost efficiencies, economies of scale, and rigorous cost control to offer the lowest price in the market, attracting price-sensitive customers.

Best-cost provider (B) combines low cost with differentiation, which is less relevant for standardized commodities.

Broad differentiation (C) and focused differentiation (D) are strategies that rely on distinguishing the product from competitors, which is challenging with standardized commodities.

Porter, M. E. (1980). Competitive Strategy: Techniques for Analyzing Industries and Competitors. Free Press.

Grant, R. M. (2016). Contemporary Strategy Analysis. Wiley.

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asked 16/09/2024
Gaetano di Girolamo
36 questions
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