Before talking about which companies implement cost leadership strategies, we must first understand what cost leadership strategies are. Cost leadership strategy, also known as low-cost strategy, generally refers to reducing costs in order to provide customers with lower-priced products, and there are many ways to reduce costs, including: simplifying product types, reducing labor costs, improving design products, and controlling procurement sources Wait.

Therefore, we can see that as long as the company is not a monopoly, there will be problems such as fierce competition, serious product homogeneity, and strong bargaining power of consumers, so basically most companies will adopt a cost leadership strategy. For example, Gree and Midea in air conditioning; Volkswagen and Honda in the automotive industry; Hisense and Haier in TV sets, etc.

The purpose of implementing the cost leadership strategy is to enhance the strength of the enterprise, and it is also a preemptive strategy. Its requirements for the enterprise are that it must have continuous capital investment and financing capabilities, and be in a leading position in the industry in terms of production skills. .

To effectively implement the cost leadership strategy, it is necessary to carry out cost control, and the way of cost control has been mentioned above. The main way to be adopted is determined according to the industrial structure of the enterprise.

When cost control becomes a cost advantage, it will have a multiplier effect in the subsequent operation of the enterprise, but this does not necessarily mean the lowest price, otherwise the enterprise will fall into an endless price war.

Especially when the cost of the enterprise is not the lowest, but the price is the lowest, then whether the enterprise can survive in the end depends on its own capital investment and the time supported by its competitors. Therefore, this should be the most avoidable thing.

So what are the goals of implementing a cost leadership strategy?

1. The minimum requirement of a cost leadership strategy is to reduce costs

Cost reduction can be said to be the minimum requirement of cost leadership strategy, because under the premise of unchanged price, cost reduction means profit improvement, but there are too many obstacles to the practical operation of cost reduction in enterprises, this is because Cost reduction is nothing more than two kinds, one is people, and the other is things.

There is a contradictory relationship between personnel and the enterprise itself. If too much emphasis is placed on reducing labor costs at this time, it will not be conducive to the absorption and retention of talents. Therefore, more efforts are made to improve labor efficiency.

The reduction of the cost of things will produce certain constraints on the other side, and the constraints are also resisted by people. Although enterprises are emphasizing cost management and advocating the awareness of saving, this also requires enterprises to have reasonable organizational management measures to implement. .

2. The advanced form of the cost leadership strategy is the basic condition for changing the cost

Costs are multi-faceted, and the basis for cost occurrence must be the economic resources available to the enterprise, and then through their mutual connections, find out the links that can reduce costs, and use reduction or substitution methods to operate in order to achieve no reduction. On the premise of product quality, reduce costs.

An important point that needs to be considered is that each industry or product has its core value. In this regard, we control costs mainly because of its source. We find that in many cases, the price of a technological product may only be the real material cost. It accounts for one-tenth of its price, and some are even lower. At this time, although we must pay attention to research and development, we must not oversupply.

3. The minimum goal of cost leadership strategy is to increase corporate profits

Any business is for profit, so this is the minimum goal of the cost leadership strategy, but the cost reduction cannot be made in advance by harming the interests of employees or products. Profits can be imagined.

Therefore, cost control is multi-dimensional, and it is necessary to comprehensively consider the connection of each link, and use the most appropriate cost to maintain quality, maintain or increase prices, and expand market share to enable enterprises to obtain higher profits.

In general, the implementation of cost leadership strategy is the most important part of business operation, but we cannot reduce costs too blindly to reduce costs. Otherwise, when product quality is not good, employees are not motivated, and customers experience poor It will push the business into a corner.