After completing a SWOT analysis, a company begins to set its strategy to advance from its current position. Porter describes a strategy spectrum whereby a company has two choices: cost leadership and product differentiation. Which of the following is a company who is not purely a cost leader or a product differentiator but somewhere in the middle of the spectrum?
A) Feltz is a factory that produces felt fabric at the lowest cost possible by using as much automated machining as possible.
B) Freshies is a grocery store that carries unique products and strives to keep their costs as low as possible.
C) Paisley, Inc., is an upscale jewelry store that specializes in the sale of one-of-a-kind necklaces.
D) Turnips is a grocery store that sells product in bulk so it can offer lower per-unit costs to customers.

Question

Quizplus · Accepted Answer

This question requires familiarity with SWOT analysis and the associated strategies. Choice B is correct as Freshies is using both a product differentiation strategy by focusing on the variety or uniqueness of what they sell and a cost leadership strategy by offering products at their lowest possible cost. The remaining three choices are incorrect since they are either strictly a cost leadership strategy or strictly a company that uses a product differentiation strategy.

After Completing a SWOT Analysis, a Company Begins to Set