Discussion Q7 Presentation
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Kirinyaga University College *
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108
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Arts Humanities
Date
Nov 24, 2024
Type
pptx
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Uploaded by mwangiandrew9819
DISCUSSION
QUESTION 7
Introduction
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For this discussion I have chosen cost leadership strategy.
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Cost leadership is a strategy that businesses use to obtain an edge in a competitive
market.
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This strategy involves lowering production costs while keeping quality standards
high enough to satisfy customers (Block et al., 2015).
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The major objective is to provide goods or services at a cheaper cost than rivals in
order to attract price-conscious clients and gain market share.
Advantages of Cost
Leadership
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There are a lot of benefits to taking a cost leadership stance. First and foremost,
businesses that use this approach effectively may gain a large consumer base.
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Many buyers are price sensitive and look for value in products and services
(Gareche et al., 2019).
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Cost leaders might obtain an advantage in this market by providing their goods or
services at cheaper rates.
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The possibility of more profits is still another benefit. Cost leaders' pricing approach
often results in lower profit margins, but the additional business brought in by their
cheap prices may more than make up for this.
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Disadvantages of Cost
Leadership
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There are drawbacks that should be taken into account. The possibility of lowering
standards is one disadvantage.
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Leaders in cost reduction must guard against providing inferior goods or services at
reduced costs.
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Keeping costs down without sacrificing quality is essential if you want to keep your
customers coming back (Block et al., 2015).
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There is also the possibility that cost leaders may have trouble adjusting to shifting
customer tastes and innovative technologies.
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To be competitive and meet the ever-evolving needs of the industry, agility, and
adaptability are necessities.
When Cost Leadership Can Be
Used
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Cost leadership is most effective for businesses in price-sensitive marketplaces
because people value low prices more than devoted brand names or special
features.
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This tactic has shown to be effective in a variety of markets, including the fast food
and airline industries.
Examples of Companies that
Use Cost Leadership
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The cost leadership approach has been successfully applied by a number of firms.
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The success of Walmart, the biggest retailer in the world, may be attributed in
large part to the cheap pricing it consistently offers.
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Walmart is able to save money by streamlining its supply chain, and it gives those
savings to its customers.
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Southwest Airlines is another company that has found success by providing a low-
priced service while yet making a profit.
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References
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Block, J. H., Kohn, K., Miller, D., & Ullrich, K. (2015). Necessity entrepreneurship and
competitive strategy. Small Business Economics, 44, 37-54.
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Gareche, M., Hosseini, S. M., & Taheri, M. (2019). A comprehensive literature review
in competitive advantages of businesses. International Journal of Advanced Studies
in Humanities and Social Science, 8(3), 223-240.