12.5 Cost Leader with Product Lifecycle Focus

A Cost Leader with a Product Lifecycle Focus gains a competitive advantage by keeping R&D, production and material costs to a minimum, enabling it to compete on the basis of price. The Product Lifecycle Focus will allow the company to reap sales for many years for each new product introduced into the High Tech segment. Products will then mature into Low Tech products.

Mission Statement

Reliable products for mainstream customers: Our brands offer value. Our 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 assets/equity between 2.0 and 3.0.