Cost Leadership Business Strategy

Cost Leadership Business systemCost leading is a business dodging developed by Michael Porter. It functions the organization create competitive advantage. Cost leaders refers to provide terminal damage of unconscious process in the industry and it is different from price leadership. Its a good deal driven by organization efficiency, size, scale, scope, engineering science and experience. A address leadership strategy use to exploit scale of issue, producing luxuriouslyly standardized products by using high technology. An organization could be the lowest hail producer, only not offer the lowest-priced products or services to client. Therefore the organization would wee-wee a higher than average do goodability. However, apostrophize leader organization bequeath manage on price and are very effective at such a form of competition, having a low apostrophize social structure and management. The organizations can increase the trade share by appealing price-sensitive customers. This is striked by having the lowest prices in the tar set about market segment to appealing price-sensitive customer age the organization still profitability and a high sideboard on investment. The organization must be able to operate at a lower monetary value than its rivals. Organization can achieves this by achieving a high asset turnover, low direct and indirect operating costs, and entertain over the confer/procurement chain to ensure low costs.The guild choose are capital of the United Kingdom Biscuits Berhad Group, eastern nutrient Industries Sdn Bhd and Apollo Food Industries Sdn Bhd. capital of the United Kingdom Biscuits Berhad Group is a manufacturing and marketing cakes and snack food which score high in terms of product safety and quality based in Malaysia. It is listed in the main market of Bursa Malaysia. The debate our group chosen this telephoner is in the yearbook report 2010 the club outlook and prospect reference about the cost effective. Besides, the partnership strategy for go also depict they march toward cost leadership. It relate to assignment topic which is compete on a cost leadership strategy.Oriental Food Industries Sdn Bhd is the food manufacturing industry, at present holding the leading position in the snack food and candy store industry in Malaysia. It also listed in the main market of Bursa Malaysia. ace of the aim for research and development squad is to shrivel cost and wastage while increasing productivity and maintaining standards. This strategy shows the corporation trying to achieve cost leadership. Apollo Food Industries Sdn Bhd is the manufacturing compound chocolate confectionery products and layer cakes based in Malaysia. The caller-out also listed in the main market of Bursa Malaysia. One of the connection strategies is apparatusing and maintains the quality management system and continually improves its effectiveness. This strategy shows the friendship is towards to cost leadersh ip.Bodycapital of the United Kingdom Biscuits BerhadThe first caller is London Biscuits Berhad. From annual report, they honorable create-to doe with that the company is toward cost efficiency by few strategies. The first and foremost, London Biscuits Berhad hurt apparatus the low cost in the main mad corporal. The company bought Lay Hong Berhad to assure has a continuous and adequate supply of quality liquid addicts at reasonable price. Liquid egg is one of the main edged materials in manufacturing of cake product. After, the company have take up a controlling stake in TPC positively charged BERHAD( TPC) at a reasonably cheap entry cost. TPC is a company also listed in the main market of Bursa Malaysia, mainly involved in producing chicken eggs for industry, commercial and consumer use. TPC is also a supplier of London Biscuit Berhad. The action helper the company have own supplier of egg with assured quality and cost-effective to the company.The bit strategy they s ee is mass production, it can help the company to stiffen the average cost. The reason is that, mass production can reduce the wastage in raw material as well as achieve cost-effective at capacious range perspective. In the annual report, they mention they are commissioning of new-made cake production path which to be the single biggest production line in South East Asia. The line allow fors more(prenominal) than double of the company existing production capacity.The trioly strategy implement is upgrade technology to improve production efficiencies, reduce wastage and reduce custody requirement. In annual report, the company mention about older machines and facilities in snack manufacturing discussion section are upgrading to custom design and built machines. For long term, this depart help the company maintain production cost and lead to cost leadership in the industry.The last strategy implement is directors training. In annual report, the company mentions certain dir ectors have attended training and seminar whether in-house or external in various areas to enhance their skills to contri hardlye more effectively to the company. This action forget help the company running with more efficiency, implement useful strategy and reduce the mistake in finality making by director.Oriental Food Industries Sdn BhdThe Second Company is Oriental Food Industries Sdn Bhd. From the annual report, the groups pre-tax profit grew faster at 37.5%. Its driven principally by a emend sales mix as well as a more efficient cost structure. From the statement, we can know the company is a cost leadership company.The first strategy the company use to achieve cost leadership is directors training, it can find in the group annual reports. This lead improve the ability and efficiency of the director in making decision. This will reduce the wrong decision making, indirect reduce the loss in making a wrong decision. Besides, in the annual report mention the company provide o n- line-training and external courses for relevant departments to ensure the sufficiently dexterous to perform effectively and efficiently. This strategy can help the company reduce the manpower require and save cost pay for Over Time.The second strategy implement is reducing cost and wastage and increasing productivity. From the company websites, the RD team engages in various research methods in order to improve the production process to achieve the strategy. This will lead the company to cost leadership.The third strategy implement is technology. From the company website, they mention the company abreast with the in vogue(p) technology developments. The company produces the products with modern machinery for increase the productivity and efficiency to achieve economic of scale. It also can help the company reduce the manpower using.The forth strategy implement is the relationship with suppliers and customer. In the annual report, the company mentions Mr. Son Chen Chuan as a Man aging Director in the company, he had close relationship with the supplier and customer. With the relationship with supplier they can get the material with quality and lower price. This will reduce the cost for the company.Apollo Food Industries Sdn BhdThe third company is Apollo Food Industries Sdn Bhd. From the annual report, all the director have completed the Mandatory Accreditation Programmed (MAP). The aim of this training is to enhance their skills and knowledge. It can help the directors in decision making to reduce the error and risk. When wrong decision making, the risk and cost for the company is high, it can help the company save cost.The second strategy implement is training provide to employee. From the annual report, the company mention the employees are provided with necessary training in various job related organized by external parties to enhance the skill and knowledge. This will help the company reduce the manpower and pay for Over Time.The third strategy impleme nt is reducing wastage. From the annual report, the company mention operation and office resources are been utilized without much wastage and recycling are universe encourage at all time. This strategy will save the cost for the company and lead the company towards cost leadership.The forth strategy implement is continuous improve in production planning. From the annual report, the company invests on newer and modern production machineries to increase the production and reduce the cost.These companies have employ several similar strategies such as mass production, upgrade the technology and director and employee training. These strategies will help the companies to achieve economic of scale, reduce the manpower and other expenses in order to achieve cost leadership in the industry. Besides, these companies also have implement different strategies to leads the industry. The London Biscuits buying their supplier to reduce the raw material cost and insure the quality of raw material. This strategy not implement by the two companies, it become favorable position for London Biscuit Berhad. The Oriental Food Industries Sdn Bhd implement different strategies but the same aim is to get the material at reasonable price. This company achieves this by having a good relationship with the supplier to increase the bargain power to supplier.3.0 ConclusionThe three companies uses to research are from the same industries that compete with each other in the same market. These three companies use their cost leadership strategies in the confection industry in order to reduce the cost and keep their price low to compete with others and increase the market share to survive. Most of the strategy are similar but implement in different ways to achieve cost leadership strategies. Besides, thither are some different strategies use are different from others. These help company have superiority when compete with other.