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A global business has adopted a strategy which aims to lower the average cost of its product by increasing output - HSC - SSCE Business Studies - Question 6 - 2016 - Paper 1
Question 6
A global business has adopted a strategy which aims to lower the average cost of its product by increasing output. What is this strategy called? (A) Outsourcing (B)... show full transcript
Worked Solution & Example Answer:A global business has adopted a strategy which aims to lower the average cost of its product by increasing output - HSC - SSCE Business Studies - Question 6 - 2016 - Paper 1
Step 1
What is this strategy called?
Answer
The strategy adopted by the global business to lower the average cost of its product by increasing output is known as 'Economies of scale'. This concept refers to the cost advantage that arises with increased output of a product, where the cost per unit of output generally decreases as scale increases. Therefore, the correct answer is (D) Economies of scale.