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Page 2 of 7 Cost Leader With Product Life Cycle Focus
Strategy
A Cost Leader with a Product Life Cycle Focus strategy seeks to minimize costs through efficiency and expertise. Products are allowed to age and change in appeal from High Tech to Low Tech buyers.
Mission Statement
Reliable products for mainstream customers: our brands offer value. Our primary stakeholders are bondholders, stockholders, customers, and management.
Tactics
• Research & Development: We will have low R&D spending with very little repositioning on existing products. We will introduce a new product to the High Tech segment every 2-3 years.
• Marketing: Initially we will attempt to keep pace with the awareness and accessibility of our competitors' products. After we establish our cost leadership position we will revisit our situation to decide whether sales and promotion budgets should be reduced or if we should continue to match our competitors. Our prices will be lower than average.
• Production: We will significantly increase automation levels early in the product’s life-cycle.
• Finance: We will finance our investments primarily through long-term bond issues, supplementing with stock offerings on an as needed basis. When our cash position allows, we will establish a dividend policy and begin to retire stock. We are not adverse to leverage, and expect to keep debt/equity between 2.0 and 3.0. We measure performance in terms of stock price, ROE, and ROS..
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