Overall Cost Leadership

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  • Topic: ABC Radio and Regional Content, Cost, Logistics
  • Pages : 2 (540 words )
  • Download(s) : 437
  • Published : April 24, 2011
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Overall Cost Leadership
Porter defines “Overall Cost Leadership” as the strategy in which a company differentiates from others by having the lowest prices of the market. One example of this strategy correctly performed in Australia is Woolworths. According to Jhon Steen (2009), in order to accomplish such prices, Woolworths focus on two main points: Logistics and Economics on Scale. They have learned to manage the supply chain in a very efficient way, investing in technology and reducing the number of distribution centres. The company is still getting even bigger rapidly, and these growth strength the bargain power over suppliers which results in lower costs. Stephen Long, reporter of ABC News, contributed with a report in 2009, in which Suppliers complained of how difficult is for them to negotiate with Woolworths and Coles because they represent a major percentage of all their sales. Coles is following Woolworths very closely. And this is a perfect example of why it is not recommended to focus only in this only one strategy, there will always be someone in the competence who will get as low prices, and maybe better ones. So it seems like Woolworths made the difference by developing an Emotional value by the slogan “Fresh Food People” and wise advertisement, creating positive feelings of TRUST in people, which make them feel comfortable shopping at Woolworths. The perfect indicator is its nickname “Woolies” among consumers. Porter defines “Overall Cost Leadership” as the strategy in which a company differentiates from others by having the lowest prices of the market. One example of this strategy correctly performed in Australia is Woolworths. According to Jhon Steen (2009), in order to accomplish such prices, Woolworths focus on two main points: Logistics and Economics on Scale. They have learned to manage the supply chain in a very efficient way, investing in technology and reducing the number of distribution centres. The company is still getting...
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