Individual Learning Project: Cost Leadership

Phonya Lewis

Liberty University

BUSI 601-B05

Dr. Jimmy Hinton

March 3, 2013

¬¬¬Maintaining a competitive edge over the competition in any industry can be challenging for most business, especially a large corporation such as Samsung Electronics. While many think that such a large company would have total control of output and input that is not always the case; especially with a company that focuses heavily on a differentiation strategy. According to Blocher, Stout and Cokins (2010), “cost leadership is a strategy in which a firm outperforms competitors in producing products or services at the lowest cost” (pp. 16). Michael Porter, Harvard University Professor illuminates that a company lacking one of the competitive strategies is easily left with no competitive advantage. Companies that use overall low cost and a high quality differentiation strategy, offer high quality and low prices which eventually complicates things following cost leadership. Samsung does not use a cost leadership strategy because their latest innovations spawned through a differentiation strategy are premium and maintain that status based on their innovative capabilities. However, there needs to be a concept based on producing and marketing a good quality product at a lower cost than your competitors, I will explain why. While it may seem impossible for Samsung to use both a cost leadership and differentiation strategy concurrently, in this paper I will present ways that is possible.

Cost Leadership Stratagem

Obtaining cost leadership normally entails aggressive production of effective scale facilities and keen pursuit of cost reductions through practice, cost management to include overhead control, avoiding negligible customer accounts and cost reduction in areas like research and development, sales force and advertising. In using cost leadership, reduced cost proportional to the competition is the schematic motivating factor. Samsung has the potential to outperform the...