Broad Cost Leader

"Compete based on the lowest price in many markets." This strategy has the most challenging (and yet most essential) need for accurate forecasting. Costs have to be kept down, and product quality must be consistent, while pulling in wide market segments.

Foodie example: McDonald’s, while not the industry giant they once were, are still doing...okay. Everyone still eats McDonalds, even if they don’t admit it. Everyone. Everywhere. Because it’s always the same salty, savory experience. And always cheap. Even their Meals are Happy.

Related or Semi-related Video

Finance: What does it mean to "scale"?58 Views

00:00

Finance allah shmoop What does it mean to scale Well

00:07

here's a squid eyeball from space fifty miles away and

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here's a squid eyeball from our boat the pesca squid

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alia's from a mile away and here's a squid eyeball

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from the view of our iphone we just dropped in

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the water when the squids when right beneath the boat

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scaring the crap out of us literally at one scale

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we could barely see the ocean At another scale We

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saw way too much eye ball scale and business has

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the same kind of dramatic effect as operations come into

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play That is it's One thing to serve lemonade drinks

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to one hundred people a week It takes one stand

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a permit grocery store visits worth of supplies it's completely

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Another thing Toe serve a million drinks a week for

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the latter You need infrastructure trucks storage and armies of

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servers to you know serve Yeah that's what they do

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someone's gotta get lemonades to the people So when a

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company scales it means that they have gone from a

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modest few million dollars of sales to sales of maybe

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one hundred million and then a billion Some like that

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The skill set for the former is a vastly different

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set than for the ladder and some people are able

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to do both Howard schultz founder and ceo of starbucks

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We're looking at you well starbucks started off is just

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one store in seattle in like five minutes later there

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were a gazillion of them all over the world thinking

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of coffee in any language So yeah that's How a

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company scales from you little toe Big big Incidentally you'll

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want to stay off the scale if you consume venti

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caramel frappe with whip on a daily basis but on 00:01:44.897 --> [endTime] there so good

Find other enlightening terms in Shmoop Finance Genius Bar(f)