Cost Leadership


Definition: Cost Leadership is one of the 3 generic strategies that can provide a competitive advantage according to Michael Porter.
In a CL strategy, a firm sets out to become the low cost producer in its industry. Often achieved by economies of scale. A cost leader must achieve parity or at least proximity in the bases of differentiation, even though it relies on CL for its competitive advantage.
If more than one company try to achieve CL in the same market, this is usually disastrous.



More on cost leadership.
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