Question

In: Operations Management

A company wants to evaluate its main strategy which is cost-leadership. The CEO needs 4 criteria...

A company wants to evaluate its main strategy which is cost-leadership. The CEO needs 4 criteria for evaluation purposes. What are the 4 criteria required to make sure it is the best strategy for the company and it has no flaw?   

Solutions

Expert Solution

Cost leadership is a strategy used in an organization that produces goods at lower cost but ensuring good quality. The cost leadership companies will reach mass audience through its pricing strategies. A company can turn to cost leadership when it has extreme resources and man power. Cost leadership aims at the scale and strategy of production and economy. They offer quality products at low price thus targeting high sales.

4 critetia that can he considered to decide that cost leadership is best for their organization can be checked with the following.

1. Success of cost leadership depends on the jount functioning of all the departments. Every department has their own responsibility to contribute to the production.

2. Production should always be on the higher level to withstand the needs of the common man

3. Cost leadership strategy proves that the company is good in bargaining. It needs to bargain the lowest price for materiel input during production.

4. Use of sophisticated technology to increase productivity as well as to maintain quality.

5. Cost leaders usually own a large share of their business market because customers are happy with quality products at low price.

Cheking all these questions and getting a valuable answer will prove that cost leadership is the best strategy in an organization.


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