A. Economies of scale + better product = cost leadership + differentiation. Although note the question doesn’t specify “successfully”.
Myself, stuck in “C” for the moment, if things continue as it is then it would definately leade to “D”. My plan is to reassess my strategies.
I’m going with A, 100% A - TRUE although maybe not over the long term. B - FALSE stuck-in-the middle means pursuing neither of those strategies. C - FALSE both of those things are bad news for the firm and not necessarily related to this strategy. D - FALSE strong management does not necessarily mean that a firm will pursue or achieve prduct differentiation, cost leadership, or both dinesh.sundrani Wrote: ------------------------------------------------------- > stuck in the middle series continues… > > > A firm can pursue cost leadership and > differentiation strategies simultaneously when: > > A) the firm’s costs are strongly affected by > market share or it pioneers a major innovation. > B) the firm is stuck in the middle and the > condition is long term. > C) there are no economies of scale and the firm is > operating in the rising portion of its total > average cost curve. > D) the firm has a very strong management team with > a great deal of experience.
B, A sights been dead on, and I just reread porters reading in the cfai texts. Had I not, I would have probably bombed these.
I’m changing my answer to B. A would be right if it said : “the firm’s costs are strongly affected by market share AND it pioneers a major innovation.” Still B is more correct. ARG should never have answered a question so early in the morning.
******************* Correct answer is A.
Black Swan Wrote: ------------------------------------------------------- > B, A sights been dead on, and I just reread > porters reading in the cfai texts. Had I not, I > would have probably bombed these. just to clarify that was b for the first a for the second and my phone changed dwight to sight adding to the confusion. Dwight, you gotta stick to your initial answer man, second guessing will get ya.
I disagree with my original answer. "A firm can pursue cost leadership and differentiation strategies simultaneously when: A) the firm’s costs are strongly affected by market share or it pioneers a major innovation. B) the firm is stuck in the middle and the condition is long term. " From Schweser notes page 83: “A stuck-in-the-middle firm is one that tries to achieve both cost leadership and product differentiation at the same time, but fails at both. Stuck-in-the-middle firms compete at a disadvantage to those that achieve cost leadership or differentiation.” The key is the word “pursue” which means the firm is “pursuing” both strategies, which makes it by definition stuck-in-the-middle. If the question had said: “A firm can OUTPERFORM utilizing cost leadership and differentiation strategies simultaneously…” I believe answer A would be correct. As it is, I think B is closer by definition. I’m chalking it up to a bad question combined with my overanalysis 
.
Okay, I can see your reasoning on that. As long as you understand it the way you just described you’re fine as you’re absolutely correct. The important thing is to understand the concepts as the CFAI is typically very clear and straight forward in how they word their questions. ON A SIDE NOTE AND I THINK EVERYONE SHOULD READ AND REMEMBER THIS: I was just thinking today how I remembered some people after LI saying they got some wrong on both the exam and the CFAI practice tests because they over-analyzed simple questions as they were used to Schweser’s antics. For instance, if you see a straight forward question in schweser, the best practice is to overanalyze it and essentailly search and destroy the hidden catch. However, in CFAI typically the clear answer IS the answer, so overanalyzing can get you. I’m guilty of it myself, so just keep in mind when you sit for the exam that you are sitting for a CFAI exam and not a Schweser exam in terms of the approach.
FANTASTIC piont Black. I’ll go one step further. In these questions it will help if you can figure out WHAT THEY ARE TRYING TO TEST. In this example, I think it is pretty clear that they are not trying to test you on the meaning of the word “pursue” and whether it means “succeed” or “try”, they are trying to test whether you know what circumstances a firm can be successful pursuing both strategies. If you can make that conclusion, you can eliminate the rest of the answers easily. That’s how I came up with A at first and once I got into the overanalysis part that is when I started confusing myself.