With the further development of the market economy, the competitive advantages between enterprises are becoming increasingly fierce. As a single enterprise, how to find a way out in such fierce market competition, consolidate its own competitive position, and build a unique competitive advantage for the enterprise has become a problem that many enterprises are constantly exploring. Cost leadership strategy is one of the three major competitive strategies proposed by Michael Porter, a famous American management scientist and professor at Harvard Business School. The other two strategies are differentiation strategy and concentration strategy. This competitive strategy idea can effectively help enterprises choose strategies suitable for their survival and development according to their actual conditions and form their unique core competitiveness.
Cost leadership strategy refers to the enterprise’s use of effective means to make its total cost lower than that of its competitors in order to obtain profits above the average level of the same industry. Cost leadership requires the establishment of efficient and large-scale production facilities, making every effort to reduce costs based on experience, tightening the control of costs and management expenses, and minimizing the costs of research and development, services, promotion, advertising, etc. In order to achieve these goals, it is necessary to attach great importance to costs in management. Although quality, service and other aspects cannot be ignored, what runs through the entire strategy is to keep costs lower than competitors.