Question

Explain the meaning and role of trade-off to any company and discuss why it is considered one of the PDM elements

Answer 1

A trade-off is a situation where we try to balance two opposing payoffs. In economics, trade off is the opportunity cost of purchasing a good and comparing/compromising one such good for another.

For a company, a trade off represents the decision of selecting a particular good/service such that a sacrifice is made to get a certain payoff , i.e. the most preferable alternative.

A PDM element, includes the inherent characteristic of providing certain benefits, e.g.- productivity(or profit), control,etc. Similarly, a tradeoff when made would generally give a certain benefit/payoff such that the entity making the decision to choose a product/good with lower opportunity cost gets more benefits.