Final answer:
In manufacturing, firms like shoemakers initially customized products, but later standardized using the putting-out system to reduce costs. Apparel companies now outsource to cut costs, often at the expense of workers. Firms select production technologies based on cost analysis, favoring either machinery or labor to minimize expenses.
Step-by-step explanation:
The decision-making process in businesses, particularly in the shoe industry, is indicative of the broader manufacturing trends that emerged in the late eighteenth and early nineteenth centuries. Initially, a shoemaker measured and crafted personalized footwear for each individual. With time and the advent of the Industrial Revolution, the production process became more segmented and standardized using the putting-out system. Workers were hired to perform specific tasks, such as cutting soles or stitching leather, often at a fixed wage. This division of labor aimed to lower costs and increase output by minimizing the use of skilled labor.
Similarly, contemporary apparel companies often outsource production to manage costs. To meet aggressive pricing and schedule demands, local factories might underpay and overwork their employees, leading to sweatshop-like conditions. Although efforts are made to ensure fair treatment through organizations like USAS, the complex network of subcontractors makes transparency a challenge.
In a different scenario, when a firm must choose between different production technologies, cost analysis is critical. For instance, if machine hours are cheaper, a firm might select production technology 3 which uses more machinery and less labor to minimize costs. Conversely, if machine costs rise, the same firm might switch to production technology 2, favoring labor over capital to decrease expenses.