Today I have been...
Reading about one of Porter's generic strategies - cost.
Why?
Required
So What?
Low cost does not mean or imply low quality, or a competitive stance based on low price. We are talking cost, not price. Sustainable competitive advantage based on cost means leadership in your cost structure, delivering what your customers want at a cost to you that is lower than your competitors to deliver greater margins. It is up to you if you want to forego some of this margin to sell at a lower price.
One way to do this is through economies of scale. Your fixed costs can be spread across more sales, reducing costs per item sold. Another is through accumulation of experience (learning curve effects).
If you can call on both these advantages this can give a cost advantage that is very difficult for your competitors to match. Other routes to cost leadership include superior technology, superior logistics and a cost-cutting culture.
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