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.
|1||2111||2001||Some cut-rate smokes are selling for as little $1 a pack, compared with an average retail price of more than $3 for big-name brands, such as Marlboro. To feed the market for inexpensive cigarettes, tiny factories are using second-hand equipment.|
|2||3241||1991||Lafarge uses synthetic fuel supplied by Systech in its waste management facility.|
|3||4512||2004||Southwest Airlines is a short haul low price airline, which flies only Boeing 737s. Historically the company has purchased only used airplanes, which they serviced themselves rather than outsourcing maintenance. The airline flies short trips averaging 375 miles between city pairs. Most of these trips are to secondary airports.|
|4||5331||2006||National brands face increasing competition as stores boost sales with their own labels. In 1975, private labels and private brands were 25% of the apparel market. In 2006, Marshel Cohen estimates that number will pass 50%, and by 2010, Cohen expects it to be over 60%. Companies like Gap and Chico long have engaged in this practice, but now chains like Target and JC Penney have come to rely on it as well. Target carries apparel lines designed by Issac Mizrahi and Massimo, which are sold exclusively at its stores. At JC Penney, clothing designed by Nicole Miller can be found nowhere else.|
|5||5411||2004||Trader Joe boasts success with its stocks of eclectic and upscale food products. Part of the reason the chain is so successful is that there is no competition. It sells products that are healthy, organic, and non-controversial at low prices. TJ also develops or imports many of its own products from sources it has developed over decades and sells more than 80% of them under the Trader Joe's brand or a variant. To save money, it moves into abandoned retail stores in second-rate locations and sells upscale products at low prices.|
|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||2006||There's a new, well-designed, free online service for finding the value of a home called Zillow.com. The site hopes to make money through advertising. When estimating home values, real-estate agents can draw on the Multiple Listing System, as well as their own local knowledge. Zillow doesn't have access to the MLS or to agents' local savvy. So, it draws on roughly 10 commercial providers of real-estate data, which supply information like a home's sale history, tax assessment and payment history, comparable home sale prices, and number of rooms in a home. This information is largely collected by the commercial-data providers from government records. Zillow also obtains some government records directly. The company acknowledges that its raw data on comparable sales can be 3-6 weeks older than the data in the MLS system that agents use.|
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