Topic > Cost Leadership: Michael Porter's Competitive Strategy

In 2010, for example, Wal-Mart accumulated sales of over $400 billion. Instead of offering only select items at a low price to attract customers, Wal-Mart uses its enormous purchasing power to force supply companies to become more efficient and always sell low-priced products. (Huebsch, n.d.). Therefore, Walmart's strategy is geared first and foremost to low prices. To achieve it, it must work more efficiently than its competitors, lower the internal costs of the company and also the prices of the products provided by the supplier. In a company that has chosen the low pricing strategy, one should not expect a high salary or the best customer service (Stankevičiūtė, Grunda, & Bartkus, 2012). NewLeaf Airlines' main strategy is to offer air transportation at the most attractive price possible. They have eliminated any “luxuries” that add additional costs to flying to ensure they are the cost leaders. “This simple, no-frills flight option may not be for everyone, but NewLeaf is betting its business future on the potential consumer segment that has been waiting for just such a product” (Davis,