Financial ManagementMCQQuestion 5511 of 217
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14. Farm Fresh Ltd., a family-owned organic farming business has been operating successfully over the past 10 years. Currently the company is facing stiff competition from the large farming houses. Hence to maintain status quo, the management of the company decided to adopt stability strategy. Which of the following initiatives best support Farm Fresh Ltd.'s stability strategy?

Options

ADevelop a new range of organic produce to attract a new segment of customers.
BImprove functional efficiency of its farm equipment to increase productivity and reduce cost of production.
CPurchase a number of farms to increase production.
DAdd a few channels of distribution to attract customers in related market areas.
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Correct Answer

Option BImprove functional efficiency of its farm equipment to increase productivity and reduce cost of production.

All Options:

  • ADevelop a new range of organic produce to attract a new segment of customers.
  • BImprove functional efficiency of its farm equipment to increase productivity and reduce cost of production.
  • CPurchase a number of farms to increase production.
  • DAdd a few channels of distribution to attract customers in related market areas.

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Detailed Solution & Explanation

Correct Answer: Option **B** Explanation: A **Stability Strategy** is a corporate-level strategy where a firm is satisfied with its current position and focuses on maintaining its status quo, consolidating its position, and focusing on incremental improvements in functional efficiency rather than aggressive expansion.
* **Option B** (*Improve functional efficiency of its farm equipment to increase productivity and reduce cost of production*) directly supports a stability strategy because it aims to optimize existing operations internally to survive competitive pressures without expanding the scope of the business. * **Option A** (*Develop a new range of organic produce to attract a new segment of customers*), **Option C** (*Purchase a number of farms to increase production*), and **Option D** (*Add a few channels of distribution to attract customers in related market areas*) are all characteristics of **Expansion (Growth) Strategies** (such as product development, horizontal acquisition, and market development respectively).
Hence, **Option B** is the correct answer.

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