3. Executives tend to ignore the market shifts in the products and the change in consumer preferences when they only prioritize low prices. The Nature of the Focus Cost Leadership Strategy. It requires the vigorous pursuit of cost minimization techniques such as efficient utilization of scale of production, good purchasing strategy, modern technology and produce quality products. Cost leadership is not a practical strategy for most companies, especially small to mid-sized companies. Several examples of firms pursuing a focused cost leadership strategy are illustrated below. Examples of Focused cost leadership Redbox uses vending machines placed outside grocery stores and other retail outlets to rent DVDs of movies for $1. Wal-Mart follows an economic value model by having low costs because of their capability to buy in large quality and it has become successful cost leader in their market. It might lead to adverse effects, as the brand loses its exclusive tag and is no longer desired by its target customers. Focused Cost Leadership Strategy - This section provides examples of Ikea and Morgan Lynch using focused cost leadership product and service strategies respectively. Product costs and operational expenses must be kept low in order for customers to take advantage of the savings the low-cost leadership strategy offers. Focused Cost Leadership Strategy. Introduction… Michael Porter is a professor at Harward Business School. The cost leadership strategy is one of the so-called "Porter's Generic Strategies," and the value chain, outlined in Porter's 1985 book Competitive Advantage, is a series of events companies undertake that add value. Thus, companies need to consider various strategies to remain successful and keep their plus side against their competitors and continue to have a positive impact on revenue and profits. With this strategy, the objective is to become the lowest-cost producer in the industry. He then subdivided the Focus strategy into two parts: "Cost Focus" and "Differentiation Focus." In implementing this strategy, a company must minimize costs and pass the savings on to the customer. Claire’s, for example, seeks to appeal to young women by selling inexpensive jewelry, accessories, and ear piercings. Several examples of firms pursuing a focused cost leadership strategy are illustrated below. Examples of Focused cost leadership Redbox uses vending machines placed outside grocery stores and other retail outlets to rent DVDs of movies for $1. Few examples of the biggest low-cost carriers in the United States is Southwest Airline with a market capitalization of $14.1 billion (May 2020) and the biggest carrier in terms of originating domestic passengers boarded. Manufacturing avoids waste, error, and the use of unnecessary assets. Strategies can range from competitive pricing to hiring skilled teams to reduce cost and all of them can be focused on one and only one goal “success and long-run stability” of the company. In the worst scenario, such a situation can cause the business to file for bankruptcy. A focused cost leadership strategy needs to compete based on price to target a niche market. 1. Why is cost leadership potentially so important? Usually lower service levels with options to buy refreshments, Most low-cost airlines operate out of secondary airports which are located further away from the city. So often, people use the terms price leadership and cost leadership interchangeably, but these two are entirely different concepts. They utilize a business model with an emphasis on low fares, reducing overheads and cost cuts by using secondary airports with cheaper landing charges. 1. 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