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Cost leadership - Coggle Diagram
Cost leadership
Cost Advantage
Focus: Gain advantages = reducing its costs below competitors
Parties
Focal firm develop strategy ⇒ Exploit advantage
Competitor develop strategy to capture advantage + complete other basis
Sources
Economies of Scale
Diseconomies of Scale
Learning Curve Economies
Differential Low-Cost Access to Productive Inputs
Technology Independent of Scale
Policy Choices
Value
Entry
Buyers
Substitutes
Suppliers
Rivalry
Generic Business Strategies
All businesses can pursue in different industry environments
Results from a company’s consistent choices on product, market, distinctive competencies
2 Strategies
Cost leadership
Product Differentiation
Cost Leadership Strategy Implementation
Functional Structure
Divides management responsibilities by function (Marketing, Finance, R&D,...)
CEO - only executive, responsible for strategy formulation & coordination of functions for implementation
Management Controls
Aligning the interest of individual with organization ones
Compensation Policies