The only issues with this strategy are the lack of loyalty among customers that are price-sensitive. Several examples of firms pursuing a cost leadership strategy are illustrated below. Some companies either provide a few services for free or they keep a low price for their products for a limited period that is for a few months. The largest retail chain in the world, Wal-Mart also believes in cost leadership. Each of these is an example of a Generic Strategy, as coined by Porter. This is certainly true for Walmart, for example. Your company would focus primarily on building a large market share by providing prices lower to competitors. Utilize strategic analysis tools such as the SWOT, BCG Matrix, or Balanced Scorecard to analyze both the internet and external factors that will influence you. 3. 2. Businesses attempting to … Here is an explanation on how to organize your business strategy to work for you. Here is a how-to guide for creating a cost leadership strategy: This strategy is focused on developing a product that is more unique or better than the competitors. There are five basic characteristics that your business strategy should include. These strategies are termed generic because they can be applied to any size or form of business. Redbox rents DVDs and video games through vending machines for only $1. These initial strategies as described by Porter were: Cost Leadership (cheap, no expenses), Differentiation (unique or premium products) and Focus (a specialised service or market). It can impact your competitive advantage over a period of time and establish your overall brand and future direction for your business. Overall Cost Leadership Strategy. Choices are limited with these renovators, so don't expect customization. An example is in the gift basket industry which is highly competitive. But cookie-cutter renovation companies have made a mark in the home renovation market. Low-cost leadership strategies enable an organization to develop standardized products in large volume at low cost, which give that organization a competitive edge over the competitors in the market. But because they are getting the same cabinets or countertops over and over again, they are able to get deeper discounts on those products. Low inventory levels are maintained, the inventory turnover is high, the plant lead time is less, the buyers are low­cost and match their value chain with the customer, they enable time-definite deliveries with low variability and orders are generally standardized. As a business owner, you need to consider the various marketing strategies that will have the greatest impact on your revenues and profits. Thus a cost leadership strategy helps create barriers to entry that protect the firm—and its existing rivals—from new competition. 3. A cost focus strategy is same as a cost leadership strategy, but the major difference is that in a cost focus strategy your organization pic out a very specific part of the market and discount that market the affordable prices, available in the market. Another good example of cost leadership strategy is the Swedish home furnishing brand, IKEA. Strategic managers in the organization make a concerted effort to lower business costs in order to achieve a competitive advantage. Cost-leadership is among several general business strategies developed by author and well-known business management guru Michael Porter. A flexible business strategy that can meet changing demands and growth. The airline is known for a fun and pleasant flying experience PLUS lower prices. 2. 1. Finding ways to bring higher quality materials, better customer service or an ability to have a unique brand or image can develop your establishment. 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