Cost leadership and sustained

competitive advantage
Cost leadership and sustained
competitive advantage
If no firms imitate a cost leadership strategy
then it is not a sustained competitive
advantage

Rare sources of cost advantage
Likely to be rare sources of cost
advantage
Less likely to be rare sources of cost
advantage
Learning curve economies of scale(
emerging businesses)
Economies of scale
Differential low cost access to productive
inputs
Diseconomies of scale
Technological software Technological hardware
Less rare sources of advantage


Imitability of sources of cost advantage
Even when a particular source of cost
advantage is rare, it must be costly to imitate
in order to be a source of sustained
competitive advantage.
Duplication and substitution are the forms of
imitation
Easy to duplicate sources of cost
advantage
Low-cost duplication possible : Economies of
scale, Diseconomies of scale
May be costly to duplicate : Learning-curve
economies, Technological hardware, Policy
choices
Usually costly to duplicate : Differential low-
cost access to factors of production,
Technological software

Bases of cost leadership that may be
costly to duplicate
Cost advantage based on learning curve
economies are rare they are not costly to
duplicate
The ability of firms to learn from their
production experience may vary significantly


Costly to duplicate sources of cost
advantage
Differential access to low cost productive
inputs and technological software is costly to
duplicate
These inputs usually build on historical,
uncertain, and socially complex resources and
capabilities
Substitutes for sources of cost
advantage
Reducing cost through exploiting economies
of scales in large scale production
Reducing cost through exploiting learning
curve economies and large cumulative volume
of production