Cost leadership is a small business strategy produced by Michael Porter. It can help the business create competitive advantage. Cost leadership identifies provide most reasonably priced of operation in the industry and it is different from price leadership. It's driven by company efficiency, size, range, opportunity, technology and experience. A cost control strategy use to exploit level of creation, producing highly standardized products by using high technology. A business could be the lowest cost maker, but not offer the lowest-priced products to customer. Which means organization would have a higher than average profitability. However, cost innovator organization will contend on price and are incredibly able to such a form of competition, having an inexpensive framework and management.
The organizations can boost the market show by interesting price-sensitive customers. That is achieved by having the lowest prices in the prospective market portion to pleasing price-sensitive customer as the organization still profitability and a high profits on return. The organization must be able to operate at a lower cost than its competitors. Group can achieves this by achieving a high asset turnover, low immediate and indirect operating costs, and control over the resource/procurement chain to ensure low costs.
The company choose are London Biscuits Berhad Group, Oriental Food Industries Sdn Bhd and Apollo Food Market sectors Sdn Bhd. London Biscuits Berhad Group is a making and marketing cakes and snack food which score saturated in terms of product safety and quality located in Malaysia. It really is listed in the primary market of Bursa Malaysia. The reason why our group chosen the corporation is in the annual report 2010 the company outlook and prospect mention about the price effective. Besides, the company technique for go also show they march toward cost authority. It relate to assignment issue which is compete on the cost leadership strategy.
Oriental Food Establishments Sdn Bhd is the meals making industry, today keeping the main position in the snack food and confectionery industry in Malaysia. In addition, it listed in the primary market of Bursa Malaysia. Among the aim for research and development team is to lessen cost and wastage while increasing output and maintaining specifications. This plan shows the business trying to accomplish cost management. Apollo Food Sectors Sdn Bhd is the processing compound delicious chocolate confectionery products and layer cakes based in Malaysia. The company also detailed in the main market of Bursa Malaysia. Among the company strategies is putting into action and maintains the product quality management system and regularly improves its efficiency. This strategy shows the business is towards to cost management.
London Biscuits Berhad
The first company is London Biscuits Berhad. From gross annual report, they refer to that the business is toward cost efficiency by few strategies. The first of all, London Biscuits Berhad have put into practice the reduced cost in the key raw material. The business bought Lay down Hong Berhad to assure has a continuous and adequate way to obtain quality water eggs at affordable price. Liquid egg is one of the main recycleables in creation of cake product. After, the company have take up a managing stake in TPC PLUS BERHAD( TPC) at a reasonably cheap accessibility cost. TPC is a company also shown in the main market of Bursa Malaysia, mainly involved with producing poultry eggs for industry, commercial and consumer use. TPC is also a company of London Biscuit Berhad. The action help the business have own dealer of egg with confident quality and cost-effective to the business.
The second strategy they use is mass production, it can benefit the company to lessen the average cost. Associated with that, mass creation can decrease the wastage in uncooked materials as well as achieve cost-effective at long range perspective. In the gross annual report, they mention they are simply commissioning of new cake production lines which to be the one biggest production series in South East Asia. The lines wills more than two times of the business existing development capacity.
The third strategy implement is upgrade technology to boost production efficiencies, reduce wastage and reduce manpower need. In annual record, the company point out about aged machines and facilities in treat manufacturing division are replacing to custom design and built machines. For long lasting, this can help the company save creation cost and lead to cost command on the market.
The last strategy use is directors' training. In gross annual report, the company mentions certain directors have went to training and workshop whether in-house or external in various areas to improve their skills to add more effectively to the business. This action will help the company working with an increase of efficiency, implement useful strategy and decrease the blunder in decision making by director.
Oriental Food Industries Sdn Bhd
The Second Company is Oriental Food Market sectors Sdn Bhd. From the annual survey, the group's pre-tax revenue grew faster at 37. 5%. It's driven principally by a much better sales mix as well as a better cost structure. From statement, we can know the business is an expense leadership company.
The first strategy the company use to achieve cost authority is director's training, it can find in the group twelve-monthly reports. This can improve the potential and efficiency of the director to make decision. This will reduce the wrong decision making, indirect decrease the loss to make an incorrect decision. Besides, in the annual report mention the business provide on-job-training and exterior classes for relevant departments to ensure the sufficiently skilled to execute effectively and proficiently. This strategy can help the business reduce the manpower require and save cost pay for Over Time.
The second strategy put into action is lowering cost and wastage and increasing efficiency. From the business websites, the R&D team partcipates in various research methods to be able to enhance the production process to attain the strategy. This may lead the company to cost management.
The third strategy implement is technology. From the company website, they speak about the business abreast with the most advanced technology developments. The company produces the merchandise with modern machinery for improve the productivity and efficiency to achieve economic of level. It also can help the business reduce the manpower using.
The forth strategy put into practice is the partnership with suppliers and customer. In the annual report, the company mentions Mr. Child Chen Chuan as a Managing Director in the business, he had close romantic relationship with the provider and customer. With the relationship with company they can get the material with quality and cheap. This will reduce the price for the company.
Apollo Food Companies Sdn Bhd
The third company is Apollo Food Industries Sdn Bhd. Through the annual record, all the director have completed the required Accreditation Programmed (MAP). The aim of this training is to improve their skills and knowledge. It can benefit the directors in decision making to reduce the mistake and risk. When incorrect decision making, the risk and cost for the business is high, it can help the business save cost.
The second strategy implement is training provide to employee. From the annual report, the business mention the employees are given with necessary training in various job related prepared by external people to improve the skill and knowledge. This will help the company decrease the manpower and pay for AS TIME PASSES.
The third strategy use is minimizing wastage. From your annual report, the business mention operation and office resources are been applied without much wastage and recycling are being encourage whatsoever time. This plan will save the price for the company and lead the business towards cost management.
The forth strategy implement is ongoing improve in production planning. In the annual report, the company invests on newer and modern development machineries to increase the production and reduce the cost.
These companies have implemented several similar strategies such as mass creation, update the technology and director and worker training. These strategies will help the companies to accomplish economic of size, decrease the manpower and other expenses in order to achieve cost leadership on the market. Besides, these companies also have use different ways of leads the industry. The London Biscuits buying their company to reduce the raw materials cost and guarantee the grade of raw material. This plan not put into practice by the two companies, it become superiority for London Biscuit Berhad. The Oriental Food Companies Sdn Bhd execute different strategies however the same goal is to get the materials at realistic price. The corporation achieves this insurance agencies a good relationship with the company to improve the bargaining capacity to supplier.
3. 0 Conclusion
The three companies' uses to research are from the same companies that contend with the other person in the same market. These three companies use their cost control strategies in the confection industry in order to reduce the cost and keep their price low to compete with others and boost the market talk about to survive. A lot of the strategy are similar but put into action in various ways to achieve cost command strategies. Besides, there are some different strategies use are different from others. These help company have superiority when contend with other.
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