What are significant threats to a firm pursuing a cost-leadership strategy?

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18-10-2022
Business

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What are significant threats to a firm pursuing a cost-leadership strategy?

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shomerajeshwari90 shomerajeshwari90 · Answer 1 · 2022-10-26T13:07:33+02:00

Significant threats to a firm pursuing a cost-leadership strategy will be - Replacement by innovative substitutes, Competitors adopting similar business strategies, value falling below the acceptable threshold.

When a business leads the industry in low price, it is considered to be engaging in cost leadership. A company must reduce expenses in every other part of the business, including that of marketing, delivery, and packing, in order to accomplish this without dramatically reducing revenue. A company's strategy for attaining cost leadership in a market or category is described as a cost leadership strategy.

There are many benefits of having cost leadership as companies can charge lowest amount for a product while being profitable. To compete with a cost leader's prices, other businesses might be forced to sell their goods at a loss.

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