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: Less Function:
Less advice or information

No. Industry SIC Year Notes
1 2721 2005 Launched in 2001, The Week is aimed at the U.S. intelligentsia. The news magazine became a must-read for politicians, celebrities and CEOs who like its smart distillation, presentation and the array of subjects. The average household income of the reader is $137,000. Stories are lifted and compressed from a variety of sources by a team of 20 editors. Costs are lower than those of competitors because there is no original reporting. To market the product, discounts and free subscriptions are given to important celebrities and CEOs in hopes that they will publicly praise the publication. Discounted rates lure in readers, 55% of whom pay the full price of $75 once the special offer ends. The publication has forged relationships with the Conference Board and holds forums on a variety of subjects to increase its exposure and reputation.
2 5411 2005 Grocery stores, hotels, airports and restaurants are installing self-service stations. Specialized computer companies like NCR and Radiant System develop systems for banking and finance, government, broadcasting, retail and restaurants. The kiosks speed the checkout process for customers and increase efficiency and customer satisfaction. The machines also give companies useful data on their customers. Sales of the kiosks totaled $492 million worldwide in 2004, a 6% increase. The segment has a large set of customers across many vertical markets.

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