Mini$-$Case #$1-$ Generic Strategies

The questions below examine competitive positions, strategies, and profits in the fictional New Cake Industry, in which only three firms compete, Lizzo Foods $($LF$),$ Cardi Creations $($CC$),$ and Beyonce Cake Queen $($BCQ$)$ and in which there are three equal$-$sized segments:$$ wedding cakes, children's cakes, and family cakes. Beyonce Cake Queen sells only children's cakes, while Lizzo Foods sells only wedding cakes. Cardi Creations sells cakes for all segments. All information relevant to the questions appears below and all amounts are in $ millions.

Lizzo Foods prides itself on creating fun$-$filled wedding cake designs. LF sells cakes with high$-$end ingredients to corporate clients such as wedding planners and hotels. LF$\text{'}$s effervescent CEO is able to avoid marketing and advertising costs by finding creative ways to attract media exposure. Selling $1$ million cakes last year, the firm earned $$10$ million in revenue.$$ Its costs included:$$ $$4$m for baking, $$0$m in marketing, and $$2$m for distribution and all other expenses.

Beyonce Cake Queen makes children's cakes, which it sells to families with kids and makes with simple ingredients. Children are obsessed with BCQ$\text{'}$s fabulous cakes and the firm emphasizes this in its advertising. The firm sold $1$ million cakes last year, generating $$5$m in revenue & incurring the following expenses: $$2$m for baking, $$1$m in marketing, and $$1$m for distribution and all other expenses.

Cardi Creations has a creative name, but is a boring firm:$$ CC$\text{'}$s cakes are fluffier than those of its rivals, but its prices and costs are equal to those of the industry average $($i$.$e$.,$ price $=$ $$7\mathrm{.}50$ per cake and cost $=$ $$5\mathrm{.}00$ per cake$).$

How would you categorize the competitive position of Beyonce Cake Queen?

$($Hint: It is not enough to just read the prompt above. You need to use the financial data above and perform some calculations in order to answer this question.$)$

Overall cost leadership

Cost focus

Broad differentiation

Differentiation focus

Broad; Stuck in the middle