Free Online CFA Level 1 Mock Exam 7


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10. Which of the following statements most accurately describes a company that implements a differentiation strategy?

A. Strong market research teams to match customer needs with product development.

B. Tight cost controls with highly efficient operating and reporting systems.

C. Investment in productivity improving capital equipment.

Correct Answer: A

Answer Explanation:

Companies implementing a differentiation strategy try to establish themselves as manufacturers or service providers that are unique in terms of quality, type or distribution method. This requires strong market research teams to identify customer needs and match them with product development and marketing. Tight cost control, efficient systems, and capital investment in productivity improvements characterize firms that pursue a cost leadership strategy.

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