Techniques For Gaining Competitive Advantage Through Cost Leadership

Question: Briefly describe some of the techniques that can be utilized to gain competitive advantage through cost leadership. Why is it important to incorporate a total life-cycle approach into costing? Answer: Techniques For Gaining Competitive Advantage Through Cost Leadership Cost leadership is one of the most effective steps through which the company can draft the best policies that will increase the quality of the production activities. In this method, the company can adopt strategy through which the quality of the production activities can be increased, without impacting the manufacturing price. This is one of the best strategies that will enable the company to improve the production activities that would enable the best use of the resources that is required for rendering the best possible services to the clients. In this process, the company develops the best strategies through which the competition and the competitors offers can be analysed (Arnold and Hatzopoulos, 2000). The benefit is with the process that is adopted for developing the pricing strategies. Through this method, the company intends to service the clients with the best possible services. Also, the management can plan to remain ahead in the competition. In this method, the lower price strategy is adopted to render the best possible price. It is quite important to develop an effective strategy through which the expectations of the clients can be analysed. This is one of the most important factors, as it will help in attracting maximum number of clients. It is also possible to increase the maximum number of sales, by selling the best products at the lowest possible price (Bennouna, 2010). By charging the products at the lowest price, it is possible for the company to charge nominal profit. At the same time, it is also possible to expand the market to different areas, which is quite necessary for the successful business operational activities. Customers these days, have many options when compared to the earlier days. This is because there has been a tremendous increase in the number of production activities and the company that renders such services. In order to attract the customers, it is essential to offer the best deal to the clients. This is possible by analysing the needs and expectations of the clients. In order to reduce the quality, the company has to develop the best possible strategies that would help in attracting the clients. The step that needs to be followed for attracting the clients or implementing the cost effective strategies is quite a challenging task. In this process the steps that needs to be adopted by the company has to be unique to serve the purpose (Carter and Ejara, 2007). The price and the quality of the products are some of the factors that impact the customers willingness to buy the products. Apart from this, the company also work towards offering lucrative deals like discounts or other concessional products that would serve the purpose of the buyers. However such a deal or strategy doesnt usually work for every company, especially the ones that manufactures luxury products to the clients. In this process, the customers wouldnt mind investing in the purchases of the goods and services that are considered to be luxurious in nature. Thus, the strategies and the challenges involved in the process needs to be analysed while attempting to offer the best deal (Martin, 2007). References Arnold G and Hatzopoulos P, 2000. The Theory-Practice Gap in Capital Budgeting: Evidence from the United Kingdom. Journal of Business Finance Accounting,, vol. 27, no.5, pp. 603-626, 2000. Bennouna K, 2010. "Improved capital budgeting decision making:evidence from Canada", Management Decision, Vol. 48 no. 2 pp. 225 247, 2010 Carter T and Ejara D, 2007. Value innovation management and discount cash flow. Journal of Management Decisions, Vol. 46, no. 1, pp. 58-76. Graham J and Harvey C, 2001. The Theory and Practice of Corporate Finance: Evidence from the Field, Journal of Financial Economics, vol. 60, pp. 187-243. Martin A, 2011. The valuation of privately held firms and litigation: a case study, International Journal of Law and Management. vol.5, no.3.pp. 207-220, 2011.