BUSINESS ADMINISTRATION
STRATEGIC MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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lowest-cost producer relative to other subsidiaries
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lowest-cost producer relative to the firm’s rivals
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lowest-cost producer to the multinational firm
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lowest-cost producer relative to the local firm
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Detailed explanation-1: -Definition: Cost leadership is a term used when a company projects itself as the cheapest manufacturer or provider of a particular product or commodity in a competition. It is difficult to deploy the strategy because the management must constantly work on reducing cost at every level to remain competitive.
Detailed explanation-2: -The cost leadership strategy is a business model that focuses on reducing the cost of production and offering the lowest priced products to outperform competitors and gain market share.
Detailed explanation-3: -Overall lower cost or cost leadership refers to the strategy where a firm’s competitive advantage is based on the bet that it can develop, manufacture, and distribute products more efficiently than competitors.
Detailed explanation-4: -As its name might imply, cost leadership allows a competitive edge by manipulating production costs. It does this in two important ways: Charging lower prices to increase market share. This is done by casting the company as a low-cost alternative, which increases both sales and the company’s profile.