cost leadership based on micheal porters generic strategies

a comprehensive note on how to achieve cost leadership based on micheal porters generic strategies



Cost leadership is a strategy popularized by Michael Porter in which a company sets out to become the low cost producer in its industry. This strategy involves producing a product or service at a lower cost than its competitors. In order to achieve cost leadership, a company must focus on reducing costs in all areas of its operations.


The first step in achieving cost leadership is to analyze the costs associated with production and the cost structure of the industry. This includes looking at the cost of raw materials, labor, overhead, and other resources. By understanding the cost structure of the industry, a company can determine where it can make cost reductions.


The next step is to reduce costs in all areas of production. This may involve changes to the production process, such as streamlining and automating processes, reducing waste, and increasing efficiency. Additionally, a company can look for cost savings opportunities in areas such as purchasing, inventory management, and logistics.


A company should also look for ways to reduce its overhead costs. This may include renegotiating contracts with suppliers and vendors, renegotiating leases, or relocating to a lower cost production facility. 


Finally, a company should focus on improving its pricing strategy. This can involve setting prices at a level that is lower than competitors, reducing discounts and offering promotions, or bundling products and services.


By taking the steps outlined above, a company can become a cost leader in its industry, giving it a competitive advantage over its rivals.

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