The goal for 20915 is to improve product design and outlook. No defective units

Question

The goal for 20915 is to improve product design and outlook. No defective units are currently produced. Manufacturing conversion costs depend on production capacity defined in terms of X500 units that can be produced. The industry market size for appliances increased 10% from 2014 to 2015. The following additional data are available for 2014 and 2015: cost leadership because Cobalt is able to increase its output price faster than the increase in its input prices product differentiation because Cobalt is able to produce a given quantity of output with a lower inputs product differentiation because Cobalt is able to increase its output price faster than the increase in its input prices cost leadership because Cobalt is able to produce a given quantity of output with a lower cost of Inputs

Explanation / Answer

Cost leadership

Cost leadership is a concept developed by Michael Porter, used in business strategy. It describes a way to establish the competitive advantage. Cost leadership, in basic words, means the lowest cost of operation in the industry.The cost leadership is often driven by company efficiency, size, scale, scope and cumulative experience (learning curve). A cost leadership strategy aims to exploit scale of production, well defined scope and other economies (e.g a good purchasing approach), producing highly standardized products, using high technology.In the last years more and more companies choose a strategic mix to achieve market leadership. This patterns consist in simultaneous cost leadership, superior customer service and product leadership.

Cost leadership is different from price leadership. A company could be the lowest cost producer, yet not offer the lowest-priced products or services. If so, that company would have a higher than average profitability. However, cost leader companies do compete on price and are very effective at such a form of competition, having a low cost structure and management.

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