In which of the following situations would a firm most likely pursue a low-cost leader strategy?
A)There are no competitors in the market and the firm is the market leader.
B)The nature of its products does not allow the firm to maintain a volume advantage in the market.
C)The company's product is a niche product and appeals to only a few customers.
D)The market is quality-sensitive rather than price-sensitive.
E)The firm can minimize its operational expenses in order to sell higher volumes of products.

Question

Quizplus · Accepted Answer

Pursuing a low-cost leader strategy involves minimizing operational expenses in order to sell higher volumes of products. This strategy is most effective when a firm is able to achieve a cost advantage over its competitors and when the market is price-sensitive. Option A does not require a low-cost leader strategy as there are no competitors, and option C suggests a niche market where differentiation may be more important than cost. Option D suggests a market where quality is a priority over price. Option B suggests that the firm cannot maintain a volume advantage, which makes a low-cost leader strategy challenging.

In Which of the Following Situations Would a Firm Most