A cost leadership strategy can be at risk of becoming obsolete and must be evaluated regularly in terms of current competitor responses.

Question

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Other firms may develop new ways of cutting costs, leaving the old cost leaders at a significant disadvantage. The older cost leaders are often locked into their way of competing and are unable to respond to the newer, lower-cost means of competing. This is what happened to the U.S. auto industry in the 1970s.

A Cost Leadership Strategy Can Be at Risk of Becoming