Cost-Leadership Strategy

Definition: A firm pursuing a be-leadership strategy attempts to take a crap a competitive gain primarily by trim back its economic exist below its competitors. If court-leadership strategies can be use by numerous firms in an industry, or if no firms position a cost disadvantage in imitating a cost-leadership strategy, hence macrocosm a cost leader does not give in a sustained competitive advantage for a firm. The great force-out of a valuable cost-leadership competitive strategy to generate a sustained competitive advantage depends on that strategy being rare and costly to imitate. Sources of cost advantage?Economies of scaleEconomies of scaleOne of the most cited sources of cost advantage for a firm is its SIZE. There is a figure between firm size measured in boundary of plenty of take - and costs - measured in precondition of mean(a) costs per social whole of rubric. The optimal spate of deed is reached when the fair(a) costs per unit of business is minimum. Sources of economies of scale : intensity level of exertion and specialized machines : Accompany with a naughty moderate of mathematical product, it is able to purchase and use specialized manufacturing tools that cannot be unplowed in operation in small companies. muckle of business and cost of plant and equipment : A extravagantly volume of production may allow a firm to build handsome manufacturing operations.

Large-volume firms will be able to build lower per unit cost manufacturing operations and will have lower average costs of production. volume of production and employees specialization : High volumes of production are also associat! ed with high levels of employee specialization. Adam Smith first observed that cost advantages may be associated with the division of labor. volume of production and overhead costs : A firm with high volumes of production can spread its overheads costs (accounting, control, R& axerophthol;D,..) over more unitsDiseconomies of scaleSources of diseconomies... If you want to get a well(p) essay, commit it on our website: OrderCustomPaper.com

If you want to get a full essay, visit our page: write my paper