Question

Suppose you were hired as a consultant for a company that wants to penetrate the Comp-XM market. This company wants to pursue a niche cost leader strategy. From last year’s reports, which company would be the strongest competitor?

Answer 1

Answer:

Chester Company

Explanation:

Niche Cost Leader Strategy is to set the price for the products as lower than all the competitor's products and still be in profit. Thus by having set the lower prices than competitor's products in the market and achieving profit for the organization.

Chester Company is the strong competitor for the Niche Cost Leader Strategy company based on the given information, and the data as explained below.

• There is very low change in the stock market price ($0.45) and very low variation in closing stock price for the Chester Company. This indicates that the company has stable market stock price.

• Chester has lowest margins (35.8%) and lowest profits $3,144,115, as compared to other companies where as sales is high ($158,062,285), which is close to other companies of high sale value (Andrew - $211,593,184)

• Profit of Chester is lowest as compared to other companies, though sale is good. This indicates that the product price is lower than others. Thus it is strong competitor for niche cost leader Strategy Company.

• Production for the Chester Company is very high against the capacity of the company.