Question

An example of a firm applying the overall cost leadership generic strategy in a value-chain activity would be to automate the production assembly line to reduce scrappage from quality errors.1. True2. False

Answer 1

Answer:

1. True

Explanation:

As one of Porter's generic strategies, the Cost Leadership strategy aims to place a firm high above when relating to cost, that is, being a leader in your market or industry.

There are two ways to achieve this:

1. charge industry average price to increase profits by lowering prices
2. charging lower prices to increase market share.

Therefore, automating the production assembly line will reduce quality errors and increase the profits made.