A retailer buys in container volumes, runs no-frills warehouse stores and earns a thin margin on a large volume. Which strategy is this, and which KPI fits it best?
A retailer buys in container volumes, runs no-frills warehouse stores and earns a thin margin on a large volume. Which strategy is this, and which KPI fits it best?
Answer
Cost leadership — cost per order shipped
Options - A. Cost leadership — cost per order shipped - B. Cost leadership — gross margin per brand - C. Product differentiation — cost per order shipped - D. Customer experience — repeat-purchase rate Why - A. Correct — the advantage is the lowest cost structure, so the measure that tells management it is holding is the cost of getting an order out the door. - B. The strategy is right, but a cost leader watches cost per unit of activity, not the brand margin a differentiator watches. - C. Differentiation wins by a unique product at a premium; nothing in the description is unique except the price. - D. There is no service or relationship here; the customer comes for the price.
OpenStax Accounting v2 §12.1–12.2; Heisinger & Hoyle §13.5; the three generic strategies are public ideas (Porter; Treacy and Wiersema) — the companies and KPIs are the course’s own