Tag Archives: low cost strategy

Low cost airlines – the story of Goldilocks

There has been a lot in the media recently about low cost airlines – with the demise of Monarch and the cancelling of thousands of flights by Ryanair.  For me this illustrates how getting your strategy “just right” is incredibly … Continue reading

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Why operations are at the heart of any business strategy

I blog about operations.  But this has to be placed in the context of the overall strategy of the business or organisation conducting those operations.  So it’s worth now and again to ponder on strategy, and reflect on current thinking … Continue reading

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The impact of seasonality and fuel costs on easyjet

easyjet shares lost 6% this week on the release of their half year results.  The airline, like most other similar airlines in Europe, always makes a loss in the winter months  due to lower levels of demand at this time … Continue reading

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“Perception beats reality in pricing”

I love the headline from this Bain & Company article.  Largely because for years I have banged on about managing perception, as well as managing reality, in any service operation you might run.  For instance, one area that this is most … Continue reading

Posted in Chap 02 Winning Customers, Sector: Entertainment & Sport, Sector: Financial Services, Sector: Hospitality & Tourism, Sector: Public Services & Charities, Sector: Retail | Tagged , , | Leave a comment

Risks associated with being a low cost operator

There are a number of risks associated with being a low cost operator. A cost leadership strategy may have the disadvantage of lower customer loyalty, as price-sensitive customers will switch between operators if they offer a better price. A reputation … Continue reading

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What’s a low cost firm look like?

An operator implementing a cost leadership strategy tends to have many of the following characteristics: Few layers between the top management and workforce, keeping their reporting structure simple. A small head office, with relatively few corporate staff. Operating decisions delegated to unit … Continue reading

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Apple up and low cost androids in – so bye-bye Samsung?

I just love it when two different stories I’ve blogged about merge into one…  This week I blogged about Apple’s record profits, and have been running a series of blogs on the low cost strategy.  It seems that a combination … Continue reading

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How to keep costs low other than through scale

As part of the series of blogs on the low cost strategy, yesterday we discussed economies of scale.  But there are other ways of achieving low costs. One is by achieving low direct operating costs. This can be done by offering high … Continue reading

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How economies of scale lower costs

One of the earliest ways in which it was possible to achieve cost leadership was to create economies of scale.  This meant firms needed to become big and have large production volumes. This is because, in general, as the volume of production goes up, … Continue reading

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Why adopt a low cost strategy?

Firms adopt a low cost strategy when one or more of these conditions exist: price is the dominant means of competing the operator’s product is a standard, commodity-type item readily available from a variety of other operators there are not many ways to … Continue reading

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