Final answer:
Low-cost leadership is a competitive strategy focused on being the lowest cost producer, enabling a firm to offer products at prices lower than competitors, often leading to higher profits and market share. Companies like Amazon exemplify this through their cost-efficient production models, while innovation is emphasized by leaders like Samsung's CEO as a means to maintain a competitive edge.
Step-by-step explanation:
Low-cost leadership is a competitive strategy where a company aims to become the lowest cost producer in its industry. Option 2) The ability to offer products or services at a lower cost than competitors, is the correct definition of low-cost leadership. This strategy is pivotal for companies like Amazon, as their efficient production model and cost structure allow them to offer products at prices that are often lower than their competitors'. These companies frequently utilize economies of scale to reduce costs and optimize their operations for maximum efficiency. As a result, they can produce or procure goods more cheaply and pass the savings on to their customers, thereby gaining a substantial market share.
Companies that successfully implement a low-cost leadership strategy often enjoy higher profits by attracting price-sensitive customers and achieving a higher sales volume. A testament to the power of innovation in driving low-cost leadership can be seen in the words of Gregory Lee, the CEO of Samsung, who emphasizes the importance of continuous innovation to stay ahead of competitors. This approach to innovation helps firms maintain a temporary edge and the ability to earn above-normal profits before competitors catch up, as also exemplified by Amazon's success.