INTRODUCTION TO COST AND MANAGEMENT ACCOUNTING

 INTRODUCTION

• Michael E. Porter in his theory of Generic Competitive Strategies has described ‘Cost Leadership’ as one of the three strategic dimensions (others are ‘Product differentiation’ and ‘Focus or Niche’) to achieve competitive advantage in industry.
•  Cost Leadership implies producing goods or provision of services at lowest cost while maintaining quality to have better competitive price. In a business environment where each entity is thriving to achieve apex position not only in domestic but global competitive market, it is essential for the entity to fit into any of the three competitive strategic dimensions.
•  Cost Leadership, also in line with the subject Cost and Management Accounting, can be achieved if an entity has a robust cost and management accounting system in place.