Question

Discuss ways businesses can reduce cost of production

Answer 1

Ways business can reduce cost of production -

I) Inefficient production process used by the workers and lack of awareness of cost effective production might be a cause for a business' high production cost. Training employees to make them understand how the production cycle works and what would be their role in cost reduction will help the company to reduce production costs.

II) One of the main production cost is the Component cost i.e. cost on components that makes up the final good. Reducing this component cost by buying less expensive components or, buying in a bulk (without affecting the quality of final goods) may help the business to cut down it's production cost.

iii) A business should first find out what are the key characteristics of it's goods and what value it provides to customers. Cutting down costly unwanted, unimportant features that add no value to consumers is a solution for a business to reduce production costs while retaining the characteristics that buyers value .