Petra's Programming Competes on Cost with WonderWeb in the Web

question 27

Multiple Choice

Petra's Programming competes on cost with WonderWeb in the web design industry. Both firms operate on a 90 percent learning curve, and neither firm is capable of increasing its cumulative output any further. How might Petra's Programming achieve a cost leadership position while maintaining customer satisfaction?

• A) by increasing the amount of time the company spends on each website by 25 percent without raising prices
• B) by eliminating costly service features like 24/7 customer support
• C) by reducing its client base and lowering output
• D) by incorporating new programming techniques to take advantage of experience curve effects

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Definitions:

Depreciation Expense

The allocation of the cost of tangible assets over their useful lives, reflecting the asset's consumption, wear and tear, or obsolescence.

Accumulated Depreciation

The total amount of a tangible asset's cost that has been allocated as depreciation expense since the asset was put into use.

Operating-Depreciation Expense

This refers to the portion of depreciation expense that is directly related to the operations of a business.

Generate Future Income

The process or strategy of creating or increasing earnings or revenue streams for a person or entity in subsequent periods.