Assignment One

Task (One)

1) Cost Leadership Strategy Definition
Companies that choose a cost leadership strategy offer relatively standardized products with features or characteristics that are acceptable to customers. In other words, with a minimum level of differentiation and also at the lowest competitive price. This means that companies offer standardized to an industry’s typical customer. Customers receive value when a company successfully implements a cost leadership strategy.

Companies that wish to be successful by following a cost leadership strategy must maintain constant efforts aimed at lowering their costs which relative to competitors cost and creating value for customers. Cost reduction strategies include:

• Building an efficient scale facilities • Establishing tight control of production and overhead costs • Minimizing the costs of sales. Product research and development, and service. • Investing in state of the art manufacturing technologies.

In simply, cost leadership strategy is a type of competitive strategy with which the organization aggressively seeks efficient facilities, cuts costs, and employs tight cost controls to be more efficient than competitors.

Undercut competitors’ prices and still offer comparable quality and earn a reasonable profit. Successful strategy to defend against the five competitive forces. Such protected from powerful customers and suppliers, because customers cannot find lower prices elsewhere, and other buyer or potential new entrants occur, surely get more market share. Also acts as a barrier against new entrants and products.

2) Porter’s Competitive Forces and Strategies
Porter M. E. proposed that business-level strategies are the result of five competitive forces in the company’s environment.

Five Competitive Forces: a) Potential new entrants Companies