Accounting management on: Cost strategy

IntroductionThis essay gives the brief overview about how the high cost strategy is more beneficial to the firm in comparison to low quality and low cost strategy. The competitive advantage is the advantage maintained by the Companies over the competitors with the help of lower prices or by offering higher service and benefits which justifies higher prices. It is viewed that most of the people think that the high quality strategy is more beneficial to the firm in comparison to the low quality strategy because quality has become one of the strategic objectives for several companies in the market.  But on the others side, high cost strategy cannot be always beneficial to the firm in comparison to low cost strategy because in recent time cost leaders form the structures of cost to produce high quality services and products at the lower prices.In recent time, quality excellence has become portion of the strategic aims for various companies in several industries. The top management of the Companies has deemed to have high quality for the success of the business. Normally, consumers do compromise on the cost but they never do compromise on the quality (Coulter, 2008). Those in favor of high quality strategy might say that this strategy viewed as the weapon which enables service or product differentiation and permits the Company for charging the price premium and might be used to make the cost savings with the help of minimized scrap, warranty repairs and rework. On the other side, price skimming referred as the strategy which businesses may use when they enter into the market with the service or the product. With the help of price skimming companies charge the high price for the high quality products and then lower the price of the product when the competition starts to enter in the market (Carpenter &Sanders, 2009).  The excellence in the quality is becoming the portion of strategic aims for numerous organizations in various industries. The differentiation strategy is worried with enhancing the excellence of the product in eyes of the consumer. In general, high quality kind of the supplier could always view enhancing revenue from its increasing quality.  The high quality product may be differentiated on the basis of better design, superior reliability, features and functions, better sales support and better branding etc. It is viewed that watch of the Rolex is distinct from the watch of the Timex because of superior functions, reliability, design and features. Another example is cars of the Toyota are distinct from the cars of the General Motors because of superior reliability (David, 2011).  According to some researchers, high quality supplier could view enhancing returns of revenue from increasing its quality. These all kinds of examples show that high quality and high cost strategy is more beneficial to the firm as compared to the low quality strategy. The expectations of the consumers for the high quality product are very high and they are willing to offer high cost to the supplier for various features. Generally, consumers always prefer to have high quality product as compared to the low quality product and they are ready to offer high cost also for high quality product. This shows that high cost and high quality strategy is beneficial to the firm because this strategy offers more revenue to the firm in terms of profit.But on the other side, it is examined that low cost strategy is beneficial to the firm because cost leaders form the structure of the cost which permits them to offer services and goods at the lower cost as compared to the competitors (Alan & Eric, 2008).  The low cost strategy helps the firms in their business operations. The low cost kind of strategy, the culture of the business and its whole operational configuration is based upon low cost. Those who are not in favor of high cost strategy might say that low cost strategy focused on the company ability to deliver and manufacture products of the superior quality at the lower costs (Tim, 2008).  The strategy of cost leadership is more than cost minimization initiatives which obtain more importance in the strategic planning and company session as the path to enhance the company bottom line by enhancing its efficiency. In fact, some Companies implement their efficient structures of the cost to safeguard their place of the market from competitors by reacting to the competitors by minimizing the prices of the product (Dan, Alfred, & Roxanne, 2008). The high cost strategy cannot be always beneficial in comparison to low cost strategy because cost leaders make the cost structures which permit them to offer services and product at the least cost as compared to the competitors. For Example Wal –Mart is the Company which constantly strives to minimize the costs in the market and received the impression of supply the products at the lower prices (Barney & Hesterly, 2010).  With the help of low cost strategy Wal Mart is able to capture the place of the market and remove the competitors and enhances the market share and revenues. The companies who pursue strategy of cost leadership compare each activity with the competitors. In general, companies who pursue low cost strategy always target mass market with the proven services and products. Quality is the main feature that the consumer wants in its products, consumer always want to have high quality product with the low cost. High cost strategy is obviously beneficial to the firm because high cost lead to higher revenue to the firms. But in recent time, most of the firms follow low cost kind of the strategy which deliver and manufacture products and services of superior quality at the lower costs. It is viewed that Wal Mart is the Company which contradicts the notion that high cost strategy is more beneficial to the firm. The management of the Wal Mart said that they are able to capture the place of the market and increase the revenues with the help of low cost strategy (Pearce& Robinson, 2009).

ConclusionAt last, it can be concluded that the low cost strategy is more beneficial to the firm because it offers more relatively lower price for generation of the market share and demand.  In recent times, firms want to have superior quality products & services at the lower cost which proves that low cost strategy is more beneficial to the firm in comparison to the high cost strategy. For example Wal mart is the Company which reveals that with the help of low cost strategy they are able to capture the market share and sustain the competitive advantage over the competitors.

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