Cross-border enterprises can help enterprises build their own competitive advantages by implementing cost leadership strategies, thereby improving the competitiveness of enterprises. There are two main ways for enterprises to gain cost advantages: one is to implement effective cost control measures at every stage of enterprise value creation; the other is to rebuild a new value chain with lower costs. Regardless of which method is used to achieve the cost leadership strategy of the enterprise, the specific measures that enterprises should take are mainly as follows.
(1) Economies of scale. Production and distribution through economies of scale are the most important measures to achieve cost leadership strategies. The importance of economies of scale lies in their strategic significance. If a company can expand its output faster than its competitors, its experience curve will fall faster than its competitors, thereby widening the cost difference between them. In this case, the main strategic goal of the enterprise should be to expand its market share. As its market share expands, it can reduce costs faster than its competitors, which means that the enterprise can price its products based on expected costs rather than current costs. This is the reverse pricing method. That is, when pricing, first estimate the price that buyers can accept, or the price that should be achieved when the company’s market share target is met, and then determine the appropriate output or scale to obtain higher marginal benefits. Whether in a stable or unstable environment, an enterprise that hopes to survive and develop in the long term must accumulate experience and reduce costs by increasing sales, and at a faster rate than other competitors. Only in this way can it maintain survival and development. A large number of studies have shown that enterprises with high market share generally tend to have lower material, inventory, marketing and procurement costs.
(2) Make full use of production capacity. From a long-term perspective, enterprises can adjust their production scale and capacity according to changes in output, that is, changes in market demand. However, in a short period of time, the production capacity of enterprises is basically fixed, and changes in market demand are often accompanied by changes in production capacity utilization. During periods of declining demand, production capacity is in excess, and when demand reaches its peak, output can only be increased through measures such as overtime work. When production capacity is in excess, fixed costs must be spread over less output. In capital-intensive industries such as electronics and machinery, excess production capacity will significantly increase the cost per unit of product. In such industries, whether production capacity can be fully utilized will become the key to whether cost advantage can be achieved. Similarly, in declining industries and industries where demand often fluctuates greatly, the ability to adjust production capacity to adapt to changes in demand is the key to achieving cost advantage.
(3) Product redesign. To achieve economies of scale and thus gain cost advantages, companies must also design products that are easy to manufacture. It can be said that the key to using new manufacturing technologies and processes to improve labor productivity lies in product redesign. For example, currently, more and more integrated components are used in televisions, mobile phones and many electronic products. These components can be easily inserted into the corresponding positions, which greatly simplifies the manufacturing and installation process and reduces product costs. In fact, product redesign can also enable companies to achieve product differentiation on the basis of economies of scale. For example, in order to achieve economies of scale in design, development and parts production, the world’s more advanced automobile manufacturers have reduced the number of basic “platforms” and introduced unified models and standardized engines. At the same time, these companies have increased the differentiation of cars in style, color and other aspects to meet the different needs of customers. The company’s products are basically designed in advance, so when redesigning products, it is necessary to negotiate with suppliers in advance to achieve the goal of making new products acceptable to buyers.
(4) Reduce input costs. In a sound factor market, not every company can purchase production raw materials and semi-finished products at the same price.