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11. In Strategic Management, the concept of decrease in the overall per mile operating cost due to increase in efficiency and cumulative volume of services is depicted as:

Options

AExperience curve
BAnsoff's growth matrix
CStrategic surveillance
DValue chain analysis
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Correct Answer

Option AExperience curve

All Options:

  • AExperience curve
  • BAnsoff's growth matrix
  • CStrategic surveillance
  • DValue chain analysis

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Detailed Solution & Explanation

The correct answer is **Option A: Experience Curve**.

**Context from Case Scenario:**
The question is set in the context of a logistics/supply chain company that operates transport services. The PDF states: *"The company is of a considered view that 'we learn as we grow'. It knows that the overall per mile operating cost decreases due to increase in efficiency and cumulative volume of services. Since the company will have a cost advantage over the competitors due to reduced cost of services, it can develop and adopt a penetrative pricing strategy by setting a low price to attract more customers."*

**Explanation:**
The **Experience Curve** (also called the Learning Curve in a cost context) captures the phenomenon that as a firm's cumulative output and operational experience increases, the **per-unit cost of production or service delivery falls**. This cost reduction occurs because:
1. Workers and managers become more skilled and efficient over time (learning effect).
2. Processes are streamlined and bottlenecks are eliminated.
3. Better utilisation of fixed resources spreads overhead across higher volumes.

In the given scenario, the company observes that its **per-mile operating cost decreases** as its cumulative volume of transport services increases — this is the textbook definition of the Experience Curve.

**Why other options are wrong:**
- **Option B – Ansoff's Growth Matrix**: This is a strategic planning tool for identifying growth opportunities through product-market combinations (Market Penetration, Market Development, Product Development, Diversification). It does not relate to cost reduction with cumulative volume.
- **Option C – Strategic Surveillance**: This refers to the broad environmental scanning of the macro-environment to detect unexpected events or signals. It has nothing to do with cost per unit decreasing with volume.
- **Option D – Value Chain Analysis**: This tool (Porter) disaggregates a firm's activities to identify where value is created and where costs are incurred. While it can reveal cost drivers, it does not specifically depict the concept of cost decreasing with cumulative volume.

Hence, **Option A** is the correct answer.

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