Another way create cost leadership is by product differentiation. Looks like you’ve clipped this slide to already. 1.1.1 Cost Leadership Strategy The purpose of strategy according to … What Does Cost Leadership Mean? The primary objective of a firm aiming to attain cost leadership is to become the lowest cost producer in comparison to the competitors. Polar Bear, Polar Bear, What Do You Hear? Cost strategy prerequisites normally relate to high technical capabilities and access to capital for the company to invest in technology and assure economies of scale. 1Prof.(Dr.) In the recent years, an increasing number of companies have chosen a strategic mix to attain market leadership. A cost leadership strategy therefore aims to exploit scale of production, well defined scope and other economies thus producing highly standardized products, using high technology (Porter, 1998). The Hedgehog Model PowerPoint Template is considered as one of the top business strategy PPT template that any business or organization can use for an efficient leadership presentation. Cost leadership can be defined as the absolute lowest cost of manufacturing in an industry. The strategy has to do with pricing and not with leadership. Cost leadership does not mean that a company produces goods which are of inferior quality at comparatively cheap rates. Cost leadership strategy is much more than cost reduction initiatives that get lot of prominence in strategic planning and review session of any company as a means to improve the bottom line of a company by improving its efficiency. In the area of competitors, the cost leader is protected by its cost advantage. To deploy this strategy, a company has to produce goods which are of acceptable quality and specific to a set of customers at a price which is much lower or competitive than other companies producing the same product. Download cost leadership PowerPoint templates with attractive design quality. What is the definition of cost leadership? Cost leadership, in basic words, means the lowest cost of operation in the industry. Definition: Cost leadership is a strategy that companies use to achieve competitive advantage by creating a low-cost-position among its competitors. Some of the ways that firms acquire cost advantages are by improving process efficiencies, gaining unique access to a large source of lower cost materials, making optimal outsourcing and vertical integration decisions, or avoiding some costs altogether. A cost leadership strategy works on the basic principle that more the number of units produced, lower will be the unitary cost. A well-known airline of America, Southwest airlines, is chosen by most of the passengers due to its reasonable fares. It exploits the scale of production, by producing highly standardized products using advanced technology. Overall Cost leadership. See our Privacy Policy and User Agreement for details. Lower costs mean that the cost leader will be less affected by powerful suppliers than competitors. The cost leadership strategy usually targets a broad market. Pune university mba sem 1 question papers 2016, Success Mantra - Gurukilli in Marathi..By Prof. (Dr.) Nitin Zaware, “Novelties in Product Mix and Brand Management for Emerging Rural Market”, No public clipboards found for this slide. Save hours of manual work and use awesome slide designs in your next presentation. Implementing and maintaining a cost leadership strategy means that a company must consider its value chain of primary and secondary activities and effectively link those activities, if it is to be successful. For premium brands like Apple and Google, the cost leadership strategy cannot be used as it may backfire. Another way create cost leadership is by product differentiation. Nitin Zaware. 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