Final answer:
Both cost leadership and differentiated firms can improve execution through Benchmarking and Total Quality Management (TQM). These methods help compare and enhance business processes, ultimately contributing to falling average total costs alongside economies of scale realized by larger factories enjoying cost advantages over smaller ones.
Step-by-step explanation:
Both cost leadership and differentiated firms can improve on execution through Benchmarking and Total Quality Management (TQM). Benchmarking involves comparing business processes and performance metrics to industry bests or best practices from other industries. Dimensions typically measured are quality, time, and cost. Total Quality Management, on the other hand, is a management approach centered on quality, based on the participation of all members of an organization in improving processes, products, services, and the culture in which they work.
Technological advancements and enhanced employee education are factors that contribute to firms experiencing falling average total costs. Industries experiencing economies of scale, such as high tech or retail giants like Costco and Walmart, also see reduced costs per unit as production scales up. The adoption of efficient production technology and optimal scale of production are crucial for cost reduction without compromising the quality of output.