Pricing and Competition, Essay Example

Pricing and Competition: Enforcing leadership by low-cost price leader

The general cot leadership sets basic requirement for business enterprises to implement strategies that facilitate their ability to become sustainable producers and distributors of their product at the lowest cost possible in their respective industries (Walters & Bhuian, 97–121). This paper posits to shed light on the best applicable strategies for a low-cost price leader in enforcing its leadership through implied threats to a rival. The applicable strategies in business that can achieve this objective through cost control encompass installation of facilities in the company that are efficient, sturdy cost control and checking on overheads, elimination of marginal clientele accounts, limiting expense that are related to operations, drastic diminution of the input costs, stiff control of costs that are associated with labor as well as limited costs of distribution (Walters & Bhuian, 97–121).

The competitive advantage inherent in low-cost leader is attributed to lowering the costs associated with production as well as distribution of their products relative to other business organization in the same industry. Bluff and strategic advantage plays a significant role in enforcing leadership with the application of implied threats towards rivals of low-cost price leader. Maintenance of sound strategic advantage in an area such as the cost of manufacturing over the competitor organization, low-cost price leader is successfully capable of dominating the market (Walters & Bhuian, 97–121).

One notable example that has implemented such a strategy is Wal Mart. Competitive advantage aimed at enforcing low-cost leadership at Wal Mart was achieved through opening of several stores that drastically reduced the costs associated with production and distribution as a result of economies of scale. Wal Mart was able to drastically cut the cost hence achieving profit maximization with delivery of low cost items to the clients.

Works cited

Walters, B.A., & Bhuian. S. “Complexity Absorption and Performance: A Structural Analysis of Acute-care Hospitals.” Journal of Management 30 (2004):