Final answer:
Cost minimization is most suitable during the decline stage of the product life cycle, where businesses focus on reducing costs to maintain profits as demand contracts. The strategy involves selecting less capital-intensive production technologies and may contrast with the benefits of economies of scale seen in growing markets.
Step-by-step explanation:
Cost minimization is an appropriate strategy during the decline stage of the product life cycle. At this point, sales and revenues are falling and companies may seek to cut costs to maintain profits. This may involve shifting to production technologies that are less capital intensive and more labor-intensive, as the cost of machines and technology becomes relatively higher. For example, in response to increased machine costs, a firm might select a production technology that is more labor-focused to minimize costs. Additionally, the concept of economies of scale explains that as a firm expands its quantity of output, the cost per unit decreases. This principle is less applicable when demand is shrinking during the decline phase, and cost minimization becomes a higher priority.
In a decreasing cost industry, firms may still experience lower costs when the industry expands. However, during the decline phase, the main focus for a business would typically be to maintain profitability as the market contracts. Hence, in such a declining market scenario, cost minimization strategies are key for firms looking to survive and maintain their position for as long as possible.