THE COST LEADERSHIP STRATEGY AND ITS IMPACT ON FUTURE PERFORMANCE OF NON-FINANCIAL FIRMS; A CASE STUDY OF PAKISTAN

Abstract

The primary aim of every business is to earn profit and enhance performance over time to survive and achieve a competitive advantage. Companies spend most of their time and budget on research and development processes to find ways to increase performance. This research study is also related to the broad theme of cost leadership strategy and its impact on the future performance of corporations listed on the Pakistan Stock Exchange (PSE). The research design is based on co-relational research, and data is collected from 111 Pakistani corporations for seven years, from 2014 to 2020, by applying various statistical techniques and models are utilized, such as descriptive statistics, correlation matrix, Granger causality test, and regression models with the actual-fitted-residual graph. Further unit root ratio test and normality test are also used. However, return on assets (ROA) and sales growth ratio (SGR) are dependent variables to measure firm performance. Asset turnover ratio (AT), a ratio of sales to capital expenditures (SCE), and a ratio of staff to assets (STA) are utilized as dependent variables to measure the cost leadership approach. Firm size is the only controlling variable in this article. The results revealed that cost leadership strategy has a significant association with ROA and SGR while having a more positive relation with sales growth than ROA