Question

What does a cost-leadership strategy require for success? Increasing the perceived value created for customers which allows it to charge a premium price. It must reduce the firm's costs below that of its competitors while offering adequate value. It must increase the firm's cost above that of its competitors while offering superior value. It must reduce the firm's costs below that of its competitors while offering superior value.

Answer 1

Answer:

It must reduce the firm's costs below that of its competitors while offering superior value.

Explanation:

Cost Leadership is the mechanism of establishing a competitive advantage by having the lowest cost of operation in the industry. This strategy is especially beneficial in a market where the price is an important factor.

Cost Leadership strategy: Increasing profits by reducing costs, while charging industry-average prices. Increasing market share through charging lower prices, while still making a reasonable profit on each sale because you've reduced costs.

As opposed to offering superior products or brand appeal, a cost-leadership company's greatest value to consumers tends to be low pricing. Therefore, if a competitor can reduce costs more, it will pose a substantial threat to a company's consumer base.