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The Bates Company Has Been Producing Tools for Over Fifty

question 37

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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.
-The reward system Bates uses to encourage employees to find ways to reduce costs is an example of a(n)

Definitions:

Good Faith

An honest intention to act without taking an unfair advantage over another party, typically related to the fulfillment of contracts and agreements.

Opportunity for Inspection

A provision allowing a buyer to examine goods before purchase to ensure they meet the agreed standards and specifications.

Substantial-Impairment Requirement

This refers to a legal standard requiring a significant or meaningful reduction in the ability to perform or enjoy a right, service, or facility.

Trivial Defects

Minor imperfections or flaws that do not significantly affect the usability or function of an item or property.