Lower Cost (Cost Leadership) (VCE SSCE Business Management): Flashcards
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Practise the cards
10 cards from this deck
Definition of cost leadership strategy
Definition of cost leadership strategy
Becoming the lowest-cost producer in the industry
Required position for cost leadership success
Required position for cost leadership success
THE lowest-cost producer, not just one of the cheapest
Two approaches to implement cost leadership
Two approaches to implement cost leadership
Maintain similar prices OR charge lower prices than competitors
Asset utilisation in cost leadership
Asset utilisation in cost leadership
Using business resources as efficiently as possible
Low operating costs method
Low operating costs method
High volumes of standardised products with minimal customisation
Control over departments method
Control over departments method
Systematically reviewing and controlling costs across all areas
Business size best suited for cost leadership
Business size best suited for cost leadership
Large businesses with economies of scale
Customer loyalty disadvantage of cost leadership
Customer loyalty disadvantage of cost leadership
Price-conscious customers readily switch to lower-priced competitors
Quality perception risk of cost leadership
Quality perception risk of cost leadership
Customers may associate low cost with poor quality
Ikea's flat-pack innovation benefit
Ikea's flat-pack innovation benefit
Reduces assembly, packaging, and shipping costs