Product cost leadership

Table 9.5 provides an overview of the general objectives behind the use of tools and techniques by the managers surveyed. The Table summarises the respondents overall views about why any particular tools or technique was used by making an initial broad distinction between strategic (defined as a choice from the development of uniquely differentiated products, cost leadership advantages or to assist with competitive market repositioning for the firm as a whole) and operational (all other functional process and transactional improvement) objectives. 

The following generic strategy model by Porter shows that a company either focuses on product differentiation or product cost leadership as a core element. Focus strategies address a niche market and have to distinguish the company from other competitors in the market segment the strategy either makes it a cost leader or differentiates it substantially from competitors in the niche market. 

These companies have created core capabilities in areas other than production. They have, for example, used superior deal-making and human resources skills to expand rapidly. Moreover, they have focused their businesses by acquiring and merging business units from less focused competitors. With these, they have built up powerful positions in product innovation or cost leadership - hke that of Nova, for example, in polystyrene. 

Meyer, M., and Lehnerd, A. P. (1997), The Power of Product Platforms Building Value and Cost Leadership, Free Press, New York. 

Leadership expects cost-efficient reliable results from their manufacturing operations. Management requires a capable workforce, equipment, facilities, and materials to manufacture the product. Employees require robust processes that are easy to... 

Our price forecast for sulfur over the next decade is predicated primarily upon two basic assumptions (1) that the Frasch sulfur producers, although now a less dominant supply source in the North American and world markets, will continue to exert price leadership, especially during periods when a tight supply demand situation exists, such as today, and (2) that the pricing of sulfur in the U.S. will be determined, in large part, by the production economics of the U.S. Frasch industry - that is, the highest cost marginal supplier. 

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