Low cost strategy is a type of pricing strategy in which the firm offers the products at low price. This strategy helps to stimulate the demand & gain higher market share.
The firm can gain cost advantages by increasing their efficiency, taking advantage of economies of scale, or by getting the raw material at low cost.
For a firm to be cost leader the following internal strengths are required:
• Access to capital to make significant investments.
• Efficiency in Production system
• Expertise to improve the manufacturing process
The low cost strategy also comes up with the risk that other firms may also reduce their prices & a price may start.
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