CFA Level 1 Question of the Week – Equity Investments

This topic has 1 reply, 1 voice, and was last updated Jun-19 by Matt_AnalystPrep.

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- Matt_AnalystPrep
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  16 Jun 2019 at 9:12 am
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  Which of the following statements related to the cost leadership strategy is/are accurate?
  
  I. The cost leadership strategy is used to decrease production costs.
  II. The cost leadership strategy is used to increase sales.
  - A. I only
  - B. II only
  - C. Both I & II
- Matt_AnalystPrep
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  21 Jun 2019 at 10:29 am
  
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  The correct answer is C.
  
  Firms engaging in cost-leadership strategy seek to combine low per-unit profit with large sales to make a profit. Typically, but not always, they tend to market to a large population base or a niche with a high demand volume. Perhaps the most famous cost leader is Wal-Mart, which has used a cost-leadership strategy to become one of the largest companies in the world.
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