The Bates Company Has Been Producing Tools for Over Fifty

question 11

Multiple Choice

The Bates Company has been producing tools for over fifty years. In that time the company has been acknowledged as a producer of high quality tools at a reasonable price. Bates' competitive prices can be attributed to three factors. First, the company recognized early in its development that tools made from specific blends of various types of metal were less costly to produce and had superior performance compared to traditional metals. Accordingly, Bates made investments in developing tools made for specialty metals long before other competitors and has made a series of investments over its operating history that have put it far ahead of its competitors in terms of product development. Industry analysts believe that based on these investments it would be difficult and extremely costly, if it were even possible, for rivals to catch up with Bates. Second, in recognizing the importance of certain metals, Bates was able to sign long-term contracts with suppliers of the metals that have provided Bates with a lasting cost advantage. Finally, Bates maintains its cost advantages by using a thorough budgeting and reporting system that allows it to closely control costs, and these systems are supported by a frugal company culture and financial incentives that reward employees for finding ways to save money throughout the company.
-It would be costly for competitors to duplicate Bates due to

• A) path dependence and causal ambiguity.
• B) causal ambiguity and unique historical conditions.
• C) path dependence and unique historical conditions.
• D) causal ambiguity and patents.

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Definitions:

Armature

The rotating part of an electric machine (motor or generator) within which a current is induced by a magnetic field.

Brushless DC

A type of direct current electric motor (DC motor) that uses an electronic controller to switch the current in the motor, eliminating the need for brushes.

Wound Armature

A component in electrical machines consisting of coils wound around an iron core, which rotates in a magnetic field to induce electromotive force.

Brushes

Sliding contacts, generally made of carbon, used to provide connection to rotating parts of machines.