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Cost Leadership
A generic strategy to achieve competitive advantage, which requires being the lowest cost producer in an industry.
Implications
A competitive strategy focused on becoming the lowest-cost producer in an industry, allowing a company to offer lower prices than competitors or achieve higher margins, often achieved through economies of scale, process improvements, or cost control.
Example
Example: A discount retailer achieves cost leadership by streamlining its supply chain and negotiating bulk purchasing deals, allowing it to offer products at lower prices than competitors.
Related Terms
Different from differentiation, which focuses on unique products or services, cost leadership is all about achieving and maintaining the lowest cost structure in the market.
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