Question

Illustrate generic Strategies of Cost Leadership and Focus with appropriate example

Answer 1

Generic Strategies of Cost Leadership describes how a company gains competitive advantage across its chosen market spectrum. There are three / four general strategies, both low cost and different or focused. The company chooses to take advantage of one of two types of competitive advantage, either through its lower cost of competition or by the size difference estimated by the customer to achieve higher prices. The company also selects one of two types of range or focus (offering its product to selected market segments) or the industry as a whole offering its products in various market segments. The overall strategy reflects the decisions made in both the type of competitive advantage and the scope. The idea was described by Michael Porter in 1980.

Example..

A restaurant that turns into a fast-food table or airline with the fastest flights. In production it will include the production of large quantities of output. These methods mean that fixed costs are spread over a greater number of units of a product or service, leading to lower unit costs, i.e.. The company hopes to take advantage of the scale economy and test the curve. For industrial companies, large-scale manufacturing is becoming a strategy and an end in itself. High output needs to reach market share and create entry barriers for potential competitors who may not reach the scale needed to meet the company's lower costs and costs.