If there is one industry where low cost plays a major deciding factor, it is in transportation. Businesses spend a handsome amount on their travel, and they try to minimize this cost center. For businesses the trade off is between time and amount they spend - and in fact air-travel would be of greatest help for the time pressed businessmen.
It is pretty well reported that airline industry makes the losses perpetually and getting into it makes life hard. The whole of the airlines industry tries to keep itself efficient and operational for a long time. At one end, there are the high end luxury focused carriers and at the other there are the low cost, no-frills. We discussed the luxurious ones at another point; today we limit our discussion to low-cost carriers.
The challenge in this model is to keep the cost low, and yet give a really satisfying customer experience. Cutting the frills is one common way - you pay for everything other than your flight. The other costs that they incur would be those of fleet maintenance (so buy only a particular type of air craft); choose only particular routes; probably innovate on the cargo shipping models etc, or make connected flights routes etc. All these can easily improve the way this business operates for its profitability.
Though we have explained using the example of the airline carrier and the transportation industry, the underlying principle of Standardization is the major policy a firm intending to have this business model has to follow. Standardization forms an important key for these kinds of firms, which gives them efficiency in the support activities, and thereby keep their costs low, and provide a reasonable offering at low price to their customer too.
Read in Kannada: http://somanagement.blogspot.com/2011/05/blog-post.html
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