week 7 economic forum - strategy of “everyday low...

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How would a low-cost price leader enforce its leadership through implied threats to a rival? When marketing a business an owner should use one or more of Michael Porter’s three generic strategies which are cost leadership, focus, and differentiation (Tanwar). The cost leadership strategy can be highly effective, but it calls for a company to market its good or service at the cheapest prices, therefore the company has to minimize their costs, in order to produce a savings which they now can pass on to their customers. In turn making their competitor’s feel that they have to match their prices in order to stay competitive, this is how a low-cost price leader enforces its leadership. An example of such strategy would be Wal-Mart; Wal-Mart has been very effective using strategy such as cost leadership, their everyday low prices attract numerous customers. Their
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Unformatted text preview: strategy of “everyday low prices,” is to offer their customers cheaper products at consistent basis, and they’re able to attain this by its large scale of stores and proficient supply chain. Wal-Mart, gets their product from foreign markets that have low-wage employees and also from cheap local suppliers, therefore this allows them to sell their products at a low price and make a profit off a very thin margin, by selling at a high volume. There are a few companies that are successful in using this strategy, companies such as Southwest Airlines, McDonald's, and Ikea, just to name a few. Winston Reference Tanwar, R. (2013, November 1). Porter’s Generic Competitive Strategies. Retrieved December 12, 2015, from ....
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