Thomas owns a large IT company. He attempts to gain an upper hand in the market by using very skilled workers and inexpensive raw materials. Overall, he is very focused on controlling the costs in order to maximize the value of his products to consumers. How is this an example of cost-competitive advantage?
A. All the answers are correct.
B. Because the overall focus is on controlling costs in every segment of production.
C. Because the focus is exclusively on minimizing the cost of materials.
D. Because he advertises that his products are very cheap.
Answer (2)
Thomas's strategy is an example of cost-competitive advantage because he focuses on controlling costs in every aspect of production, not just material costs. Therefore, the correct answer is B. Because the overall focus is on controlling costs in every segment of production.
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Thomas's strategy is a prime example of cost-competitive advantage. This approach involves focusing on reducing costs in order to offer consumers more value at a lower price. Let's break down why Thomas's actions fit this concept:
Overall Focus on Controlling Costs : Thomas emphasizes managing expenses across every segment of production. He hires skilled workers, ensuring high efficiency and quality, which can reduce waste and errors, ultimately lowering costs.
Use of Inexpensive Raw Materials : By sourcing materials that are inexpensive yet adequate for production, Thomas further decreases costs, allowing him to maintain competitive pricing without sacrificing quality.
Maximizing Value to Consumers : The combination of skilled labor and cost-effective materials enables Thomas to offer products that provide high value at a lower cost. This attracts more customers and strengthens his competitive position in the market.
Therefore, the correct answer is: Because the overall focus is on controlling costs in every segment of production. This approach is not only about cheap materials but managing costs throughout the entire business operation to provide high value at competitive prices.
