When and How Cost Leadership Works for Business & Stocks

1. The product or service involved should be essential for a viable market segment.

2. Size and growth justify cost leadership: it is generally inappropriate for niches.

3. Cost leadership needs deep and wide moats. Capital, technology, regulations of other barriers should keep competition away.

4. Cost leadership should be sustainable. You may enter a market through pricing, but operating costs will gnaw away at your position.

5. Productivity and value engineering sustain cost leadership. You must stay one jump ahead on the learning curve at all times.


Each of these five concepts need expansion, clarification, and examples. Post below or email StockWay.MyView@gmail.com if you would like to know more. Your own inputs on cost leadership are also welcome.

We will move on to differentiation tomorrow.