A cost leadership strategy, also known as a low-cost strategy, is a business management approach that focuses on achieving economic success by providing the lowest priced products or services in a particular market.
The term "cost leadership" was first coined by Michael Porter in his book, Competitive Strategy. He defined it as "a strategy that provides a product or service at a lower cost than the competition."
Cost leadership is achieved through a variety of factors, including economies of scale, the use of standardization and automation to reduce labour costs, and the use of advertising to make consumers aware of the lower price.
Characteristics of Costleadershipstrategy
Costleadership is a strategy where a company maintains its competitive advantage by keeping its costs low.
Costleadership is not just about reducing costs, it also means being able to produce the same or better quality at lower cost.
The three main components of Costleadership are:
- Low-cost production
- Lower operating expenses
- Low prices
Benefits of Costleadershipstrategy
Cost leadership is a strategy that focuses on cost-cutting and low prices to provide the best value to customers.
The benefits of this strategy are:
- lower prices
- better quality products and services
Example _1.
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