What are the characteristics of a firm that is successfully

What are the characteristics of a firm that is successfully pursuing a cost leadership strategy?

Your response should be at least 200 words in length.

Solution

A firm that is successfully using the cost leadership strategy will improve its net profit because has lower production cost and will be able to provide lower price to his customers making the sales increase.

By offering products that have a better price than you competition you make sure the costumers choose your brand.

The main idea of this strategy is obviously to sell at low price but also to sell larger volumes of products to keep the profits and grow as a company.

A clear example of a company who is sing cost leadership and is working is Wal-Mart, if you have any doubts please check their yearly financial reports where the revenue is always on the hundreds of billions.

By selling products at low cost but at a large volume Wal-Mart is always growing and creating more stores and jobs all over the world.

There is an important consideration to take on this approach and is that there are industries where this approach is not effective, for example the luxury cars industry, if you are already buying something that expensive is because you have the money to afford it, you will pay the price as long as you are getting the car you want, you are buying quality.