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STRATEGIC OPTIONS OF THE LOW-COST COMPANIES

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Author(s): Laura DIACONU

Journal: Annals of the Stefan cel Mare University of Suceava : Fascicle of the Faculty of Economics and Public Administration
ISSN 2066-575X

Volume: 9;
Issue: 1(9);
Start page: 81;
Date: 2009;
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Keywords: low-cost companies | price strategy | cutting costs method | competitive advantage

ABSTRACT
The market of the low-cost companies includes those firms, national or multinational, that offer goods andservices at low prices. The implementation of the price stra tegy, which is based on various methods of cutting costs, isfavourably influenced by the existence of some factors that act not only inside but also outside a firm. Among thesefactors there are, on one side, the level of costs, of the profits, the return s on investments, the terms of payments, theability of using the resources, the competitiveness of the products, their added value and, on the other side, the existenceof some substitutes for products, the competitive pressure and the consumers’ needs an d wishes. In order to explain allthese factors and to emphasize the way in which they generate competitive advantages to the low -cost firms, we made alarge analysis and synthesis of the approaches existent in the specialized literature. The proposed them e also requiredsome mathematic equations, whose interpretation justifies the essential role played by costs inside the price strategy.

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