MGMT 4P90 Lecture Notes - Lecture 6: Cost Leadership

• School: Brock University
• Department: Business - Management
• Course: MGMT 4P90
• Professor: Maxim Vorom

Document Summary

Ge(cid:374)e(cid:396)i(cid:272) st(cid:396)ateg(cid:455): a ge(cid:374)e(cid:396)al (cid:449)a(cid:455) of positio(cid:374)i(cid:374)g a fi(cid:396)(cid:373)"s (cid:271)usi(cid:374)ess-level strategy within an industry. B(cid:455) doi(cid:374)g this it allo(cid:449)s e(cid:454)e(cid:272)uti(cid:448)es to (cid:272)o(cid:374)(cid:272)e(cid:374)t(cid:396)ate o(cid:374) the (cid:272)o(cid:396)e ele(cid:373)e(cid:374)ts of fi(cid:396)(cid:373)"s (cid:271)usi(cid:374)ess-level strategies. Four generic business- level strategies emerge from these decisions: (1) cost leadership, (2) differentiation, (3) focused cost leadership , and (4) focused differentiation . Best cost strategy: low prices and unique features that customers find desirable . Stuck in the middle: not able to offer low or unique features : cost leadership. Firms that compete on a price and target a broad target market. It offers products or services with acceptable quality and features at a low price. They have the ability to charge low prices and still make a profit. They rely on economies of scale: an advantaged created by firms when they are able to produce a good or service at a power per unit price due to the producing the good or service in large quantities.