A company manufactures special products for select customers. When demand for these products drops, the manufacturer can switch the production line to a commodity-type product that can be sold on the open market at reduced terms to generate cash.

A company manufactures special products for select customers. When demand for these products drops, the manufacturer can switch the production line to a commodity-type product that can be sold on the open market at reduced terms to generate cash.

The company is executing a corporate strategy that is based on:
A . customer focus and alignment.
B . forecast accuracy.
C . multiple downstream channels.
D . multiple upstream supply chains.

View Answer

Answer: C

Explanation:

The company’s strategy of switching production lines based on demand indicates a flexible approach to market conditions. Here’s the Explanation

Special Products for Select Customers: Initially, the company focuses on manufacturing niche products for specific customers, indicating a customer-focused approach.

Switching to Commodity Products: When demand drops, the company shifts to producing commodity products that can be sold on the open market. This ensures continuous production and cash flow.

Multiple Downstream Channels:

Specialized Products Channel: For select customers, tailored to specific needs.

Commodity Products Channel: Open market sales, providing a broader market reach and flexibility.

Strategic Flexibility: This strategy leverages multiple downstream channels to optimize resource utilization, manage risks, and ensure financial stability.

Reference: Porter, M. E. (1980). Competitive Strategy: Techniques for Analyzing Industries and Competitors. Free Press. Hill, T. (2000). Manufacturing Strategy: Text and Cases. Palgrave Macmillan.