What are some the advantages and disadvantages of low-cost leadership?

What will be an ideal response?

Not surprisingly, a firm that can produce substantially similar products at a lower cost has a significant competitive
advantage. With a cost advantage, a firm can sell products for lower prices while still maintaining the same
margins as rivals. In the process, of course, it will also gain market share. However, the same firm could keep its
prices at market level and reap higher margins than competitors. In this case, it will accumulate surplus resources
that it can either distribute to shareholders or use to finance future strategic initiatives. As a rule, however, because
taking a low-cost position means sacrificing features or services, firms that stake out this position try to satisfy basic
rather than highly specialized customer needs.
In summary, with the low-cost position, firms attempt to deliver an acceptable product that satisfies basic needs at
the lowest possible cost. In doing so, the firm attempts to create a sustainable cost gap over other firms. Successfully
following this path results in above industry-average profits. However, cost leaders must maintain parity or
proximity in satisfying the basic needs of buyers. Doing so is a challenge, because it generally requires
tradeoffs?eliminating some features