Question

Which one of Porter's Competitive Strategies describes: Central Authority, tight cost controls, efficient procurement and distribution systems, Close supervision, and finite employee empowerment?

Option 1: Differentiation
Option 2: Cost Leadership
Option 3: Focus
Option 4: None of the above

Answer 1

The Cost Leadership strategy encompasses centralized control, strict cost management, and efficiency, which aligns with the characteristics given in the student's question.

Step-by-step explanation:

The strategy that best describes a central authority, tight cost controls, efficient procurement and distribution systems, close supervision, and limited employee empowerment is Cost Leadership. This strategy is predicated on becoming the lowest-cost producer in the industry.

A firm using cost leadership will focus on reducing production costs through efficient operations, economies of scale, and strict cost control to offer lower prices to consumers and attain a competitive advantage. This is opposed to differentiating products (Differentiation strategy) or serving a targeted market segment (Focus strategy). A monopoly could potentially leverage cost leadership to enhance its market dominance by preventing new competitors from entering due to cost disadvantages.