A danger of cost leadership is that a company may misunderstand what processes actually drive its true costs.

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A danger of cost leadership strategy is that a company may focus only on reducing costs without understanding the implications of cutting costs in certain areas. This can lead to ignoring critical value-adding activities, leading to a decline in the quality of the product or service. Therefore, focusing solely on reducing costs without proper analysis and understanding of the cost structure can lead to degradation in quality and customer satisfaction, ultimately leading to a loss of market share.

A Danger of Cost Leadership Is That a Company May