Final answer:
Switching to activity-based costing is not a strategic option for remedying cost disadvantages in value chain activities. Strategies include revamping the value chain, best practice implementation, productivity-enhancing technological investments, and outsourcing high-cost activities.
Step-by-step explanation:
A company's strategic options for remedying cost disadvantages in internally performed value chain activities do not include switching to activity-based costing. Option D is incorrect because activity-based costing is a method of assigning overhead and indirect costs to products and services, and it does not directly address the reduction or elimination of cost-producing activities. Rather, options for addressing cost disadvantages typically involve:
- Revamping the value chain to eliminate or bypass cost-producing activities, especially those with low value-added contributions.
- Implementing the use of best practices, especially for high-cost activities, to improve efficiency and reduce costs.
- Investing in productivity-enhancing, cost-saving technological improvements to streamline processes and reduce expenses.
- Outsourcing high-cost activities to external vendors who can perform them more cost-effectively due to specialization or economies of scale.
These strategies align with the long-term perspective where firms can choose their production technology to make all costs variable, focusing on substituting inexpensive inputs for expensive ones to achieve the lowest long-run average cost.