The effect of Cost Leadership Strategy on training within Human Resources Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

The effect of Cost Leadership Strategy on training within Human Resources Case Study Solution

Introduction:

Strategy:

Strategy used by businesses to create a small cost of action within their place. The primary purpose of the strategy is to gain an advantage over its competitors. Another purpose of making a plan is to reduce operational cost below that of others (rivals) in the industry.

Cost Leadership Strategy:

Cost leadership strategy is followed by companies to achieve competitive advantage by achieving the benefit by setting up a low-cost position amongst its competitors. In other words,it is the company's ability and efficiency to keep prices lower than its competitors by increasing productivity and efficacy, eliminating waste from the company and control cost to remain sustainable in the industry. The cost leadership strategy was paying off very much for us, and we determined to keep it going for a little while longer and as a part able to be exercised because of the substantial working capital used by the firm.

This is no easy task for a company to become a cost leader in its industry. To become cost leader in the sector, a company should manage its value chain actively and maintain lower cost throughout the entire supply chain. Cost leadership does not mean that the company produces low-cost products, but its products must be on par with the competitors otherwise consumers stop buying their products and move for another competitor. The company must maintain the quality of its products while decreasing the cost of its products by improving efficiency, size, scale scope and also the learning curve.

Lowering prices tend to attract customers, however the only contribution to lower prices is just one piece of a puzzle on the business end.

One of the most efficient ways for a company to become a cost leader is the economies of scale.

For Example, manufacturers that produce a large number of homo genous products like automakers or retailers can purchase and ship avast number of goods together like Wal-Mart. By decreasing their operating and production cost, these companies are able to offer products to consumers at a lesser price as compared to other competitors and consistently increase sales of the enterprise. Wal-Mart can attain competitive situation due to its large scale and efficient supply chain it produces products from contemptible domestic suppliers and low-wage foreign markets. This allows the company to sell their goods at low prices and to profit off thin margins at a high volume.

The restaurant industry is known for low elastic margins that make difficult for a company to compete with low-cost leadership strategy. McDonald's has been successful with this strategy (cost leadership strategy) by offering a variety of fast food products at a very low price. McDonald's keeps prices low through a division of labor that allows the company to hire and train young employees rather than to trained cooks of the enterprise. The company also relies on some of the managers who earn higher wages because of their experience. These managers allow the staff to offer or sell the products in bargaining prices.

Body:

Here are some of the reasons why companies should apply cost leadership strategies:

Where the business is already established in the market especially when our job market is very attractive
When the company's goal or it decides to be in the average or above average level among competitors in the job market
With related to job performance training, when an inter-organizational training strategy is developed and applied successfully

The effect of Cost Leadership Strategy on training within Human Resources Harvard Case Solution & Analysis

Application of Cost Leadership Strategy in Human Resource:

In human resource, the purpose of cost leadership strategy is very common. In recruitment (hiring of an employee), training, employee expansion and organizational development one company can consider cost while the other company can find innovation or quality. Companies apply cost leadership strategy in the human resource; the simple way is to reduce the cost and also reduce the cost impact on income or profit.
Similar to most of the organizational theories, most companies misinterpret and misuse this strategy and apply it in an incorrect way and lose the competitive gain. Most of the time in some of the companies, use cost leadership in human resource is all about offering lower salaries while the requirement process, letting employees resign from the job and hire new employees at a minimum cost. Also not delivering needed training and also not following good increment and promotional strategy.
Some of the companies do not use a salary structure for distributing salaries according to their designation or experience. This happens just because the company does not invest the cost of salary surveys and they never see where they are in the market and how to increase the values of the organization. To maintain profit margins, some companies offer lower salaries, but there is no uniformity between the salaries of top management and rest of the employees. While the company gives salaries to senior management, they keep the cost at low consideration but while dealing with the wages of other employees cost becomes the most important issue...............

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