Cost leadership requires high efficiency and scale from "summary" of Competitive Strategy by Michael E. Porter
To achieve cost leadership, a firm must operate with high efficiency and at scale. Efficiency is essential because it enables a company to produce goods or services at a lower cost than its competitors. This requires careful management of resources, minimizing waste, and continually improving processes to eliminate inefficiencies. Without efficiency, a company will struggle to keep costs low and may not be able to compete on price.
Scale is also crucial for cost leadership because it allows a company to spread its fixed costs over a larger volume of output. This can result in significant cost savings, as fixed costs are typically the same regardless of the level of production. By increasing scale, a company can reduce the average cost per unit, making it more competitive in the market.
Achieving high efficiency and scale requires a firm to carefully consider its operations and make strategic decisions that will enable it to lower costs. This may involve investing in techno...
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