Reduce the Rate of Cost for the Input Used to Produce the Output
Use the same type of input and the same activities, but pay less for the unit of input employed in producing the output. A reduction in rate is equivalent to a reduction in the number of inputs for the same ICD. For example, if a person who makes $10 per hour could produce the same amount of output as a person making $20 an hour, the substitution of the $10 person for the $20 person in the process would be equivalent to cutting the number of people required to do the work by 50%.
B. Reduce the quality of the input used by using a cheaper form of the input:
The reduction in quality should bring with it a reduction in the rate paid for the input.
Use input with lower Performance
|1||0||2007||Online tools from Google, Yahoo, Microsoft and eBay allow small businesses to network employees, sell goods and manage their business without having a brick-and-mortar operation or expensive equipment. Microsoft Office Live suite of services allow businesses to share calendars, documents and email, build websites and integrate accounting function. The basic edition is free while packages with more services cost $19.95 to $39.95 monthly.|
|2||1521||2005||Competing with Pulte and Centex for a dwindling number of homebuilding sites convinced smaller builders such as Comstock to develop projects on more niche-type sites on overlooked parcels of land. Comstock set up shop and began building homes in the Raleigh market. Next, it began investing in the ability to acquire, engineer, permit and develop home lots for construction.|
|3||2086||2008||PepsiCo is reducing the amount of plastic it uses in the bottles of some non-soda drinks, in an effort to reduce environment waste and appeal to environmentally conscious customers. By reducing the thickness of bottle walls using new technology, the new half-liter bottle contains 20% less plastic. The bottles are still structurally sound enough to protect ingredients and strong enough to be stacked and transported.|
|4||2830||2004||Over-the-counter health care product maker Chattem Inc. takes advantage of its opportunities. It gets its ads on network TV, but never pays the full asking prices. Chattem also trolls around the bargain basement of media, buying a lot of media on sale.|
|5||5331||2005||Tuesday Morning signs flexible leases that allow easy outs, and targets out-of-the-way stores near upscale towns. By avoiding fancy shopping centers, Tuesday Morning can open a new store for $100,000, less than half of what specialty stores pay.|
|6||6324||2008||Health Providers like Blue Cross Blue Shield are paying doctors to prescribe generic pills. Excellus says that the practices have improved generic prescription ratio and saved patients between 10% and 12% in drug co-payments and costs.|
|7||7375||2005||Craigslist is a threat to newspaper classifieds as it becomes more and more popular. Ten million Craigslist users click on an estimated 6.5 million classified postings each month at 190 local sites in 35 countries, generating three billion page views. The company itself only has 18 employees and no sales or marketing departments. The site is bare bones, with the listings all in text and divided into a handful of basic categories. The postings aren't even searchable by zip code. There are no ads or even bold facing.|
<<Return to Reduce the Rate of Cost