cost leadership
What cost leadership means in Business A-Level, as defined for AQA.
Definitions of cost leadership
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Reference: AQA
Being the lowest cost producer in the market as a whole while charging close to the going rate, which needs scale, tight overheads and high capacity utilisation.
Using marketing to build the volume that fills the factory, spreading fixed costs over more units so the price can be cut and still cover them.
Aiming to be the cheapest producer, delivered through high capacity utilisation, lean processes and long production runs.
A position in Porter's generic strategies that reaches the customer through a lower cost per unit.
Topics that use cost leadership
- Human resource management (AQA A-Level)
- Marketing management (AQA A-Level)
- Operational management (AQA A-Level)
- Strategic positioning: choosing how to compete (AQA A-Level)
Related terms
- differentiation
- functional interdependence
- application to a named business
- focus strategy
- labour productivity
- automation
- capacity and flexibility
- capacity and headcount
Using cost leadership in the exam
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