Question

Which of the following is not a good option for trying to remedy high internal costs vis-à-vis rivals firms?

A. Investing in productivity-enhancing, cost-saving technological improvements
B. Redesigning the product or some of its components to permit more economical manufacture or assembly
C. Implementing aggressive strategic resource mapping to permit across-the-board cost reduction
D. Outsourcing high-cost activities to vendors or contractors who can perform them more economically
E. Relocating high-cost activities (like manufacturing) to geographic areas (such as China or Latin America or Eastern Europe) where they can be performed more cheaply

Answer 1

Resource mapping that does not consider operational factors is not a good option for reducing high internal costs vis-à-vis rivals. Instead, companies should invest in technology, improve employee education, and consider all operational factors when relocating production.

Step-by-step explanation:

The question pertains to which option is not favorable for reducing high internal costs compared to rival firms. In the context of firms experiencing falling average total costs, it is important for a company to focus on investing in productivity-enhancing technology and improving employee education. Such investments are strategic and can lead to long-term cost savings. Redesigning products to economize manufacturing and outsourcing to cheaper vendors are also common practices to reduce costs. However, it is critical to consider factors beyond just the cost of labor; factors such as quality of inputs, transportation, proximity to suppliers, and customers are crucial. Relocating to areas with cheaper labor can reduce costs, but it might introduce other complexities and expenses, such as potential quality issues, increased transportation costs, or supply chain disruptions. Therefore, aggressive strategic resource mapping that focuses on cost reduction without taking into account the full spectrum of operational factors may not be the best approach, as it could lead to unsustainable practices that do not consider the intricacies of global operations.