2. Advantages of low-price strategy: Low cost and low price will attract a large number of customers, who prefer to buy low-price products. This is an important competitive advantage. Disadvantages: low profit. Demand and sales must be large enough to be profitable. In addition, the low-price strategy may lead to poor product quality and lose this competitive advantage.
3. Low-cost strategy, also known as cost leadership strategy, refers to the strategy that enterprises reduce costs through effective ways, that is, the total cost of enterprises is lower than that of competitors, even the lowest cost among peers, so as to gain competitive advantage. Enterprises should gain the cost advantage, that is, the accumulated cost in the value chain (that is, the sum of the costs of various value activities).
The motivation of low-cost strategic cost: the strategic cost motivation is a factor that deeply affects the cost of enterprises: it is determined by the strategic decision of enterprises. Under the mode of strategic cost management, the analysis of cost drivers goes beyond the narrow scope of traditional cost analysis (enterprise interior, responsibility center) and a few factors (output and material consumption), and is replaced by a broader and strategic analysis of cost drivers. The intangible cost drivers concerned by strategic cost management are just ignored by traditional cost management.
The analysis of strategic cost drivers is to manage costs from a higher angle, which has a far-reaching and lasting impact on costs. Once formed, it is difficult to change and should be paid attention to by enterprises. Structural cost drivers are cost drivers related to the basic economic structure of enterprises, which usually take a long time to form and are difficult to change once determined, so the impact on enterprise costs is lasting and far-reaching. It mainly includes the scale, scope, experience, technology and geographical location of the enterprise. The execution cost driver refers to the cost driver related to the enterprise's execution of operating procedures, which is based on the selected cost driver in the enterprise