Cost leadership is characterized by four primary criteria: (1) recognition as the lowest cost producer in one’s industry, without compromise in quality or customer focus; (2) realization of a long-term cost-centric culture where cost consciousness is a across functional lines and independent of the vagaries of financial markets; (3) dissemination of cost information with regard to customer, product, distribution channel, and the like that is timely, understandable, credible, and actionable and is made available to decision makers to fuel continuous improvement; and (4) aggressive and balanced performance targets are established across the value chain.
Achievement of these targets is recognized, rewarded, shared, and celebrated.
In Table 1 we’ve summarized these important initiative killers, show stoppers, and red flags that a company should consider before embarking on a cost leadership initiative.
The business process has changed radically over the last 20 years, but the good news is that business-process based tools are still useful.
(For more information on the relationship between cost leadership and improved customer focus, see the article by Joe and Catherine Stenzel, “Employee Access to Cost and Financial Information,” in the January/February 2002 issue of These practice illustrations are representative of the ongoing commitment to low cost, customer focus, and process improvement required to sustain profitability and grow market share.
The nature of cost leadership reflects a cultural understanding that focusing on lower-profile “base hits” is more critical to long-term success than a rare, non-sustainable “grand slam” in improved performance or the appearance of such in the context of short-term financial reporting.
Their blend of cost consciousness and customer focus across their value chain, including key suppliers, is part of what’s sustaining them as a leader in this challenging economy, especially for retailers.
Note that Wal-Mart’s cost leadership achievement was built, established, and embedded in their culture during the “good times” that proceeded the current recession and not as a reaction to it.
You can see this by the number of global financial institutions that have been affected by the subprime mortgage debacle.
Compared to the “S&L crisis” of the 1980s in which the same industry was affected—and for many of the same reasons, including lax controls surrounding approval of high-risk loans—our current crisis dwarfs that debacle in magnitude, reach, and complexity.
Comments Cost Leadership Term Paper
Ryanair's Business Level Strategy Essay Example - StudyMoose
Ryanair's cost-leadership strategy is based on the intent to outperform. Paper Topic. To prevent complacency in their chosen sub-contractor, Ryanair offers only short term contracts to these third parties and every few years other companies.…
Cost leadership strategy and sustainable. - UoN Repository
The data that was quite useful in doing this research. This paper seeks to. further research could be carried out on cost leadership and differentiation.…
What is cost leadership? definition and meaning - BusinessDictionary.
Definition of cost leadership Strategy used by businesses to create a low cost of operation within their niche. The use of this strategy is primarily to gain an.…
COMPETITIVE ADVANTAGE
The first is the attractiveness of industries for long-term profitability and the. There are two basic types of competitive advantage cost leadership. mill Paper.…
An Empirical Study of Strategic Positioning and Production Efficiency
Mar 24, 2015. We provide empirical evidence that firms pursuing a cost leadership. This paper examines firm strategy and its implementation through a novel. To capture the long term strategic orientation of firms we compute the mean.…
Exploring the Implications of Low-Cost Leadership and Differentiation.
Leadership and Differentiation Strategies in the East African Community Market A Perspective of Local Firms. Dan AYEBALE. East Africa Research Papers in.…
Price Leadership and the Antimonopoly. - University of Warwick
Sep 1, 1998. There has been a steady flow of papers on price leadership since first. Two or more major companies including the largest one this term.…
Explore the Integration of Cost Leadership Strategy. - Atlantis Press
This paper focuses on the strategy of cost leadership strategy and. The research by Bao 2014 shows that R & D investment under the differentiation strategy.…
Can an Organization be a Cost-Leader and Quality Leader at the.
Sep 19, 2017. Can an Organization be a Cost-Leader and Quality Leader at the Same Time. of CESE, they reap the highest long-term financial return compared. Our paper provides three strategic avenues managers can achieve CESE.…
Process Innovation, Cost Leadership and Market Power - CiteSeerX
The paper analyzes the mechanism of how cost leadership. 1 This research has been supported by“2007 Research Project of Zhejiang Philosophy and Social.…