Cost leadership strategy

• Cost leadership strategy means selling the goods at the

cheapest price in the market.
• Some good examples of cost leaders in the market are
– Wal-Mart
– australiawholesalers.com
– francewholesalers.com

• which sell relatively cheap products due to the

advantage of bulk quantities at wholesale prices.
• Cost leadership strategies are business tools
that give companies a competitive advantage
in the economic marketplace.
 Wal-Marts
• everyday low prices (EDLP) strategy.
• Wal-Mart's ability to obtain consumer goods at
the cheapest possible price and pass these
savings on to consumers.
• Wal-Mart began developing close relationships
with its suppliers and vendors.
• These relationships allowed Wal-Mart to achieve
cost savings through large volume purchases.
• EDLP also helped Wal-Mart drive up the total
dollar amount customers spent on trips to the
store.
• Wal-Mart also developed its own distribution
network for supplying its retail outlets with
consumer goods.
• This distribution network allowed Wal-Mart to
cut out external supply chains and middlemen,
further driving down business costs.
• Owning its own distribution network also helped
Wal-Mart avoid costly rate increases from
traditional shipping methods.
 McDonalds
• A leading cost strategy for McDonalds is the
ability to purchase the land and buildings of its
restaurants.
• McDonalds also developed a strong division
of labor for its production processes, tight
management control and product
development strategy.
• strong top-down style of management is
another leading cost strategy for McDonalds.

• Using fewer in-store managers allows the

company to hire lower-wage workers to
complete tasks.
• Limiting autonomy is also central to avoiding
costly and unnecessary restaurant
expenditures like improvements or altering
business processes.