benefits of cost leadership and methods for attaining leadership benefits

benefits of cost leadership and methods for attaining leadership benefits

There are several processes that companies like Unilever, Procter & Gamble use to determine where to grow, and first and foremost the companies carry out research in order to gather the necessary understanding of the target market environment just by determining their close competitors, also they implement several strategies on how to beat those close competitors. According to product life cycle, the companies determine what market they should participate in and what stage their product or service is in, its life cycle: introduction, development, growth, maturity. In addition, the use of the research market and identification of market potential enables the companies to begin the development of an actual export marketing program hence marketing their sales up countries. Also, the companies make prior decisions concerning product design, pricing, distribution and channels, advertising, and communications in respect to their products owing to make the large volume of sales. For example, the companies organize some trade show or a state- or federally-sponsored trade mission in order to market their products. Understand the market and the underlying values and beliefs of your consumers and other key stakeholders, and develop a marketing plan that aligns well with these values and beliefs. Also, the companies make sure that their services and products attain sustainability goals by balancing the needs of meeting consumer’s desires for quality, convenience, and affordability of their products. Also, the companies make sure that they actively engage consumers with issues that are meaningful to them just by giving them a voice in marketing communication and promotions.

Since different people understand risk in different ways, Unilever, Procter & Gambl use different ways to mitigate the associated risks. For example, the company’s adopt Positive risk-taking, with an interest in innovation and change. Also, the companies have adopted several formal processes such as analytical and logical in their decision making pertaining their marketing strategies. The companies identify the Core Competences that can give Competitive Advantage in regard to their products prior to their competitors. The companies also analyze the voice of their consumers in order to make the largest amount of sales. In addition, the companies have analyzed different ways on how to gain Competitive Advantage in the Value Chain to make high volumes of sales. Also, the companies encourage consumer empowerment through many ways in order to encourage more sales.

Unilever Company has got several positive dimension of instituting a global sourcing strategy, firstly the company has introduced reduced labor cost hence maximizing the profit of the entire sales, also this approach assists investors on different methods to do business potentially in different methods. Second, the company has increased total supply capacity which involves core process hence having more capital to invest leading to huge amount of products which eventually are supplied to the potential customers for selling. In addition, the company has Tapped into skills or resources unavailable domestically hence making their customers to overrated the quality of their internationally sourced products as superior compared to the locally produced products, since the suppliers have the investment in technology hence owing the capacity to attract global business. Furthermore, the company has Developed an alternate supplier/vendor sources to stimulate competition which overseas domestic suppliers since most of the domestic suppliers are lacking the capacity hence not making the necessary investments to stay competitive in the current world market. Of all the biggest advantage of a global sourcing strategy is that it enables a Unilever company to leverage economies of scale. The company sells the same product worldwide, and is potentially able to buy its raw materials in bulk, potentially saving the company hundreds of thousands of dollars per year.

Centrally there are several negative dimension to instituting a global sourcing strategy, for example, there exist Hidden costs associated with different cultures and time zones. Increased risk of the loss of intellectual property. Also the company is Exposed to financial and political risks in countries with emerging economies amongst its targeted market, also the company is prone to experiencing loss of intellectual property as well as Increased monitoring costs relative to domestic supply.

There are several benefits of cost leadership. Hence the methods for attaining leadership benefits:

Demand Forecasting

Generally, demand forecasting is a way of predicting future demand for a certain product. Accurate demand forecasting as well as high capacity utilization is necessary to be conducted in order to realize cost advantages. For example, the firm should predict the future demand of a service on the basis of the past events and prevailing trends in the present in order to determine the probability of any loss or profit to be made in future.

Economies of Scale

Economies of scale are mainly attained by increasing marketing share through emphasizing low cost relative to the competitors. Economies of scale lead to a lower price per unit cost of product or service. For example, Unilever Company can set out to become the low-cost producer maybe in its industry entailing a great attention to cost control for a given level of its quality. In addition, the company can match its prices of their most competitors at the same time fending off powerful suppliers and customers.

Standardization:

High level of standardization of products is needed. Uniform service packages can experience loss. Mass production techniques are to be used. All these yields lower per unit costs. For example, the company can aim at the average customer which make it possible to offer a generalized set of utilities in a service to cover the greatest number of customers.

Externalization as a strategy can be implemented in several ways- therefore, provide an analysis that offers methods used to pivot or change the shape of business, specifically for global businesses

Externalization as a strategy can be implemented in several ways. For example, the speed at which the company wishes to enter its selected market. Also, the company should estimate the cost of entering the selected market, this includes the investment cost, the expected fixed and variable costs, the expected product rice and the number of units the company is expecting to sell. Also, the business should leave some room since money has got different value over time by guessing the know-how about the number of years its client break even and their rate of return. In addition, the business should evaluate its flexibility for its chosen market. Moreover, the business should forecast the political risk of the business entering the market. Also, the business should analyze the competitive risks and the level of competition of the market. Furthermore, the business should put into consideration its payback period from entering the market, weather there are pressures break even and are their expectations of return profit within a certain period of time. Also, the business should put into consideration its long-term objectives, for example, the business achievement expectations in long-term operations maybe in foreign market and also weather they will establish a presence in that market and then move onto another market

there are certain considerations and processes that global firms use to determine “How to Win” in the context of values chain, gaining competitive advantage in the value chain, matching core competencies to key competencies and generic strategies. For example, the firms should be cautious on what to be good at in order to be efficient and effective in meeting customer needs and delivering its shareholder value. Global firms also make sure that they are convenient, trustworthy and mainly focus on customer value priority for improvement. However, they also focus on identifying customer problems & developing and implementing solutions to those problems. Also, some factors such as Intimate customer knowledge allows proactive shaping of demand to the firm’s commodities hence winning the context of the value chain. Also, the firms set some room for a Future-oriented culture which seeks new strategic space avoiding making losses in future. Also, the firm provides products and services which generate anticipation and excitement among customers. Also, the firm ensures that their product is valuable, rare, inimitable as well as no substitutable to avoid direct competition from their competitors as shown in the diagram below