Michael Porter established five laws and three generic strategies. One of them talks about global cost leadership. Michael Porter , the economist and professor at Harvard Canada Phone Number List Business School, conducted an analysis in 1979. In that year, his conclusions lead him to a strategy that determines profitability in a specific sector, with which the value and projection of companies or business units in that segment.
He established five laws, which are known today as the Porter’s Five Forces, and in addition to three generic strategies. One of them talks about global cost leadership .
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This, delves into the activities of the value chain to identify those that can lead to cost advantages.
From the point of view of cost drivers, the main driver in the cost leadership strategy is the experience curve.
“The unit cost of production decreases with the accumulated number of units produced. This advantage is considered sustainable, since it is not easy for followers to imitate as long as the production technology does not change. In contrast, economies of Phone Number List scale can be more easily imitated ”.
Given this, there is a risk that the marketer must address: technological change. This is capable of canceling past investments in economies of scale or accumulated learning.
And it is that in the face of a globalized world community, such as the current one, cost leadership is vulnerable to new members from other parts of the world who can take advantage of lower factor costs, inflation being a central point.