1 A company that uses tight cost controls is likely to use a

1. A company that uses tight cost controls is likely to use a low- cost leadership strategy. True or False

2. Differentiation strategies can reduce the bargaining power of large buyers. True or False.

3. When using a focus strategy, a company tries to create a product that will appeal to the broadest possible customer base. True or False

Solution

1. According to Porter, a company using tight cost control strategy along with well-structured organizational structure and detailed control reports is following “overall cost leadership” generic competitive strategy.

Hence, the given statement is “TRUE”.

2. A company using differentiation strategy aims for developing unique products for different segment of customers. Since, the products or services offered by such firm contains unique attributes, therefore the company can charge premium price for the same. Thus, bargaining power of large buyers would be reduced for the firms using differentiation strategies.

Hence, the given statement is “TRUE”.

3. In focus strategy, a company targets a narrow market or industry segment. Contrary to this, companies using Cost Leadership and Differentiation strategy focus on wider customer base possible.

Hence, the given statement is “FALSE”.