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Essay / Research Paper Abstract
This 3-page paper discusses cost leadership as it pertains to economics. Bibliography list 2 sources.
Page Count:
3 pages (~225 words per page)
File: D0_MTcostldrs.rtf
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Unformatted sample text from the term paper:
a company moving toward a cost-leadership strategy will gain a competitive advantage by reducing economic costs below its competitors (Cost Leadership Strategy, 2009). However, a cost leadership advantage can only
work if there is only one company in a particular industry implementing it (Cost Leadership Strategy, 2009). When it comes to a sustained cost-leadership strategy, this only works when a
companys strategy involves a product that is rare and costly to imitate (Cost Leadership Strategy, 2009). There are a variety of
methods in which a company can link production to cost (thereby lowering, or undercutting costs). One of these is economies of scale - in other words, the larger a company
is (or the more regions in which it operates or the more plants it has), the cheaper it can produce a good (Cost Leadership Strategy, 2009). This is why,
for example, a company such as Procter & Gamble can afford to slash its prices on products from time to time - it produces so many of them worldwide, that
sheer volume will drive the profit. Another potential cost advantage (depending on economies of scale) could be different technologies used (Cost Leadership
Strategy, 2009). Wal-Mart, which touts its low prices, has used technology and a very lean supply chain to wring every last savings out of its operations. The result is very
low costs that can be passed on to the consumer. Low-cost strategies only work well, however, when price competition among rivals is
a dominant force, when buyers use the product in mostly the same ways and have the same needs, in a market in which buyers will shop for the best price
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