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Lowest cost leader (part 3) - Essay Example

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Take for instance, any particular HDTV these days. Just look at the pricing from say Best Buy as compared to Costco. If you look this week at them both, you will…
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Lowest cost leader (part 3)
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Lowest Cost Leader Lowest Cost Leader The only way you can truly be the lowest cost leader is to have your pricing be an apples-to-apples comparison. Take for instance, any particular HDTV these days. Just look at the pricing from say Best Buy as compared to Costco. If you look this week at them both, you will likely find that one may be lower than the other versus it was last week for the exact same TV. Such retailers are only good as their pricing REACTION time in todays fast paced Internet world. It used to be that a company could be the low cost leader for many months. Now, however, it may only be for a day or two. This can be a difficult strategy to prosecute in todays fast-paced marketplace for many products. Thoughts? Comment/Discuss in 250 words?
I do not completely agree with the argument that low cost leadership cannot be practiced in todays fast-paced marketplace. It is still possible in today’s world to be cost efficient and some companies are live examples in front of us. For example, Wal-Mart has successfully refined its supply chain which is adding values in the lowest cost possible in a consistent manner, hence driving the completion away. Another example is that of Mc Donalds who has been able to keep the prices of its products low through hiring cheap inexperienced labor and making it efficient. Ikea is sourcing its raw materials from other countries at lower costs, hence gaining a competitive advantage and Southwest airlines remained competitive for very long by reducing the fringe benefits being offered to the customers and reducing the resting time for their planes. Lost leadership is all about how a company refines its whole value chain and does something at a lower cost in a distinctive manner which cannot be acquired by a competitor (Scilly 2015).
However, it is also true that internet has improved operational effectiveness for almost all firms and that it has increased the chances of being copied rapidly hence increasing rivalry and competition. So it has become difficult for firms to stay competitive for very long and the dynamics for competition are changing quite rapidly. Therefore it has become crucial more than ever to have a distinctive strategic positioning and a unique value proposition which can be achieved with a combination of cost leadership and differentiation (Thomas 2015). The companies have proved to be cost efficient throughout human history and my take is that whatever the circumstances, there will always be winners while at the same time there will be losers too. It is all about how vigilant we are in identifying opportunities and how we react to them.
References
Thomas, J.G. (2015). "Generic Competitive Strategies." Reference for Business. Encyclopedia of Business. Retrieved from: http://www.referenceforbusiness.com/management/Ex-Gov/Generic-Competitive-Strategies.html.
Scilly, M. (2015). "Examples of Cost Leadership & Strategy Marketing." Chron. Retrieved from: http://smallbusiness.chron.com/examples-cost-leadership-strategy-marketing-12259.html. Read More
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