Final answer:
A company must incorporate superior features into its products at lower costs than its rivals to successfully implement a best-cost provider strategy. This includes innovation for cost reduction or desirable product features, optimizing cost structures, and staying competitive in the market.
Step-by-step explanation:
To profitably employ a best-cost provider strategy, a company must have the resources and capabilities to incorporate attractive or upscale attributes into its product offering at a lower cost than rivals. This entails engaging in a relentless pursuit of new innovations that allow for either lower production costs or the creation of products with desired characteristics that consumers are willing to pay for. By doing so, a firm can create a competitive advantage that enables it to offer the best value to customers. Analyzing the firm's cost structure including fixed and variable costs, average total cost, average variable cost, and marginal cost in the long run is essential in this process.When companies compete, consumers typically benefit from better or less expensive products, and companies that can deliver on these expectations can see increased profits and provide their employees with more income. Hence, businesses focusing on a best-cost provider strategy strive to optimize their value chain activities to achieve the most favorable cost structures without compromising quality. In doing so, they often adopt the best operating practices and technologies, positioning themselves effectively in their market structures.