Business-Level Strategy

Select the best answer to complete the sentence.

Rita has been asked to analyze the introduction, growth, maturity, and decline stages projected for a new product at her company. By doing so, she is analyzing the  product life cycle    .

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Explanation:

The product life cycle is a model that portrays how sales volume for products changes over the life of products. An overall cost leadership strategy relates to an organization’s desire to gain a competitive advantage by reducing its costs below those of competing firms. A differentiation strategy is one in which an organization seeks to distinguish itself from competitors through the quality of its products and services. A single-product strategy is one in which an organization manufactures just one product or service and sells it in a single geographic market.

Read the information about UNIQLO and then use your understanding of business strategy to answer the questions.

UNIQLO

UNIQLO is a clothing manufacturer and retailer with over 800 stores in Japan and over 1,000 stores in other countries. Its casual styles are priced inexpensively, with many items made from innovative fabrics. Some aspects of UNIQLO’s strategy appear to be in line with Porter’s differentiation strategy, whereas others are more aligned with overall cost leadership. For example, the company highlights its use of high-quality materials, but it also keeps prices low.

Source: Fast Retailing. UNIQLO business. Retrieved December 22, 2020, from 

Selling a large quantity of relatively few products can help to increase economies of scale. This tactic is associated with  overall cost leadership    .

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Explanation:

Overall cost leadership exists where a company reduces its costs below those incurred by the competition. This allows the company to keep prices down while still making a profit. UNIQLO offers customers relatively few products. It is more efficient and less costly to manufacture one item in seven or eight colors than to make seven or eight completely different items. By comparison, differentiation relates to selling products that customers value due to their high quality. A focus strategy involves selling products to a very specific group of customers.

UNIQLO has had strong demand for its products and it entered the growth stage quickly. Which of the following challenges is most common during this stage?

Conducting new product research

Depleting old inventories

Managing inventories

Lowering prices

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Explanation:

At this stage, inventory management will be important so that the company can ensure that it has supply to meet demand. Lowering prices will be more critical in the maturity stage, and conducting new product research and depleting old inventory will be most important in the decline stage.