Research On Cost Leadership Strategy Of Schumacher Co.

Cost leadership refers to that a company tries to get an undefeated competitiveadvantage after achieving a lowest total cost in its industry by a series of effectivemeasures of decreasing product and operational costs. The strategy of cost leadership isone of three basic strategies which were proposed by the famous American managementspecialist and economist, Harvard Business School Professor Michael E. Porter(1947-).The other two are the differentiation and the specific strategies. The specificstrategy is to achieve cost leadership and differentiation in a small area. Therefore,fundamentally speaking, the basic business strategy can be attributed to the cost leadershipstrategy and differentiation strategy.The basic functions of the Schumacher Electric Corporation’s products are for asecondary car battery charging and auto start rescuing. To continue to maintain itsleadership position in the fiercely competitive global market environment, cost leadershipstrategy has a crucial role and significance for Schumacher survival and development.The main purpose of this thesis is to make strategic plan for Schumacher according toits external and internal resources. The plan must help Schumacher to be in a dominantposition in the market despite all the hot competitions. Also bring a bit of reference forother enterprises to develop cost leadership strategy.So what are the main thinking and frame of the thesis research? How to implementthe strategy of the cost leadership? To begin with, the paper analyses the current strategicenvironment of Schumacher, to understand what the opportunities and threats are facingthe company, and what the company’s own advantages and disadvantages are. Then thereis Schumacher strategy selecting, expounding how the company chooses the strategy ofcost leadership, and the strategy choice is base on the value chain analysis. Furthermore,elaborating the strategy implementation and effects of Schumacher. Finally, summarizingthe thinking on the cost leadership strategy with a visual angle exceeding cost, andanalyzing the erroneous zone for the strategy as well as the factors that can promote the strategy. All these efforts are devoted to making an effective and operational strategic planfor some similar enterprises.The theories used in the analysis are Five-force model, SWOT and value chain, etc.The results show Schumacher’s sustainable profitability and healthy developmentneed the support of cost leadership strategy. However the key point of the strategy is theimprovement of value chain. And the cost control system should be established, total costmanagement and lean supply chain management should be implemented, the target costingmethod should be set up to ensure the realization of low-cost core competitiveness.