A Firm That Bases Each Value Creation Activity It Performs

question 14

True/False

A firm that bases each value creation activity it performs at that location where internal and environmental factors are most conducive to the performance of that activity is bound to realize location economies.

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Definitions:

Differential Profit

The difference in profit from one business alternative compared to another, used to make decisions between various options.

Alternative Use

The potential for a resource or asset to be used in a different manner or for another purpose to generate value.

Differential Cost

The disparity in expenses resulting from choosing between two options or changes in the amount of output.

Manufacturing Operations

All processes involved in converting raw materials into finished goods, including assembly, labor, and use of machinery.