It is possible for a company to be the lowest-cost producer in its industry and simultaneously have an output that is the most valued by customers. Discuss this statement.
Answers
Answer:In fact, it is the most beneficial position for a company to deliver a product that is the most valued by customer and at the same time, produce it at a lower price (compared to its rivals). This situation boils down to the understating of the relationships between value, pricing, demand and costs. When the company utilizes its valuable, rare, limitable resources to deliver a product that it more value by customer than a product offered by a competition, it will initially cost more money. But it in the long run, it may boost the profitability and allow the company to gain a completive advantage. The high demand for the product is created when customers value the product more than one of the rivals. When the company enjoys high demand, it can achieve enormous economies of scale that drive down the average unit cost. Consequently, the company is able to charge a higher price (a result of the highest utility to customers & product differentiation) and has lower costs than rivals. The case of Apple perfectly illustrates these dynamics.
Explanation:
Answer:
Yes. It is possible for a company to have a low production cost and still be most valued by customers.
Explanation:
It is possible for a company to be the lowest-cost producer in its industry and simultaneously have an output that is the most valued by customers.
In reality, it is the most advantageous position for a corporation to supply a product that is highly valued by customers while also producing it at a lower cost (compared to its rivals). It all comes down to understanding the links between value, pricing, demand, and costs. When a corporation uses its valuable, uncommon, and limited resources to create a product that customers value more than a competitor's offering, it will initially cost more money. However, in the long run, it may increase profitability and provide the organisation with a competitive advantage.
- Customers value the product more than one of its competitors, resulting in significant demand. When the company is in high demand, it can attain massive economies of scale, lowering the average unit cost.
- As a result, the corporation can charge a higher price (due to the highest usefulness to customers and product distinction) while having lower costs than competitors.
- The Apple example perfectly exemplifies these dynamics.
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