Homework Help

What is an organisation that can be characterized as pursuing cost leadership, without...

user profile pic

yaga49 | Valedictorian

Posted April 21, 2013 at 1:09 PM via web

dislike 1 like

What is an organisation that can be characterized as pursuing cost leadership, without using Walmart as an example?

1 Answer | Add Yours

user profile pic

pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted April 21, 2013 at 1:26 PM (Answer #1)

dislike 1 like

In general, organizations do not typically pursue only one strategy for gaining market share.  They are usually trying to achieve a mix of the two main strategies.  These are product differentiation and cost leadership.  In the product differentiation strategy, the firm tries to convince consumers that its product is different from and superior to that of its competitors.  In the cost leadership strategy, the firm tries to reduce its costs, typically so that it can offer lower costs to its customers.

That said, there are firms other than Wal-Mart that seem to focus more on cost leadership.  One example is Southwest Airlines.  Another is Amazon.  Southwest is well-known for its no-frills flights.  It began as an airline that didn’t serve meals or offer reserved seating.  It had no hubs and so it was not able to offer as many destinations.  It just flew people to the places it served for low fares.  Amazon is also known for its low prices.  By doing away with huge budgets for things like brick-and-mortar stores, Amazon is able to offer very low prices for the things it sells. 

While both of these firms do try to differentiate their products, they can be seen as pursuing a cost leadership strategy. 

Join to answer this question

Join a community of thousands of dedicated teachers and students.

Join eNotes