If cost-leadership strategies can be implemented by numerous firms in an industry, or if no firms face a cost disadvantage in imitating a cost-leadership strategy, then being a cost leader does not generate a sustained competitive advantage for a firm.

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If many firms adopt a cost-leadership strategy, the competition will push the prices down, reducing profit margins. Additionally, if there are no barriers to entry, rivals can quickly enter the market and adopt a similar strategy, further eroding the cost leader's competitive advantage. Therefore, cost leadership does not provide a sustained competitive advantage in such situations.

If Cost-Leadership Strategies Can Be Implemented by Numerous Firms in an Industry