What are the implications and risk/dangers of the cost leadership strategy?

Two implications for this business strategy: 1. Entry timing matters: early entrants into a market will have experience that late entrants do not yet have and so will gain a cost advantage. 2. It is important to gain and hold market share. Firms with higher market share have more ‘cumulative experience’ simply because of their greater volumes. There are however some risks and dangers from being competitive only by having the lowest costs: 1. Must be lowest! Having the second-lowest cost structure implies a competitive disadvantage against somebody You are always at risk of being undercut on price 2. Low cost strategy cannot be pursued in total disregard for quality. Cost-leader has to meet market or regulatory standards