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%.
D. Use subsidies offered by third parties to reduce total rate:
While the company may pay the regular price to the vendor of the product, subsidies available in the market place may reduce this effective rate by offsetting part or all of the purchase price.
|1||0||2004||Firms don't trade on inside information about their industry. This is not illegal or even unethical but it is a big profit opportunity. The puzzle is why firms don't use their inside information to sell rivals short when they have information that won't be good news for their rivals.|
|2||7841||2001||Netflix has built its customer base, since its launching in April, 1998, by using promotional deals with the makers of DVD players.|
<<Return to Reduce the Rate of Cost