Final answer:
Eliminating non-value-added activities generally leads to a decrease in costs and can increase profits for a company. While it does not directly increase sales, the improved efficiency may result in a competitive advantage that, in time, leads to higher sales. The overall economic benefit includes better or less expensive products, increased profits, and more income for employees.
Step-by-step explanation:
When non-value-added activities are eliminated, the company's costs will decrease. Non-value-added activities are actions or processes that do not add value to the product or service from the perspective of the customer, and as such, they do not contribute to the profit margin. By eliminating these activities, the company is able to streamline its operations and reduce wasteful spending, which in turn, can lead to an increase in profits, assuming sales levels remain constant or improve as a result of better efficiency or quality.
It is important to note that while eliminating non-value-added activities typically decreases costs, it does not necessarily mean that sales will increase directly due to this action. However, if the cost savings are significant, they can be redirected into other areas, such as marketing or product development, which might then lead to increased sales. On the other hand, if the company becomes more efficient and can offer lower prices or better quality products, this could result in increased competitiveness and potentially higher sales as a consequence.
From a broader perspective, companies that can offer better or less expensive products generally attract more consumers, resulting in increased market share and profits, while their employees might enjoy more stability or increased income. This competitive dynamic is beneficial for the economy overall, as it promotes innovation and efficiency across markets.