Question

if you were asked to review and consider the two aspects of business profitability, which of the following considerations would be associated with cutting costs?

global integration

pressures to standardize

both a and b

how custom do I need to be

all of the above

Answer 1

Both a and b

Reason: Global Integration helps to procure products from those countries which produce the required inputs at lowest price. For example, due to global integration, a car is assembled at a different place, inputs for it are procured from different countries and is exported to all together a different country. This helps in cutting costs and ultimately increases business profits.

Secondly, if the product is standardized, it helps in reducing per unit cost. For example, Mc Donalds has standardized its burgers and thus is able to sell its product at minimal cost. Hence both global integration as well as pressure to standardize help in cutting costs and increasing business profitability.