Overview

cost leadership


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The attempt to control the market through being the low cost producer (lowest cost position). See also competitive advantage; competitive strategy; positioning.

A business obtains low cost leadership by focusing attention on it at every functional level of the organization. Low cost leaders typically:1 optimize the operating efficiency of facilities;2 pursue cost reductions through tight procedural controls, and avoidance or elimination of marginal customer accounts; and3 minimize costs in areas like research and development.

1 optimize the operating efficiency of facilities;

2 pursue cost reductions through tight procedural controls, and avoidance or elimination of marginal customer accounts; and

3 minimize costs in areas like research and development.

Many businesses have grown from small to very big over the years using low cost leadership as a strategic tool. Some of the more famous examples include Briggs and Stratton, Texas Instruments, Black and Decker, Du Pont, and Wal-Mart. Low cost leadership is certainly a proven approach to successful competition in the marketplace.

Subjects: Marketing.


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