Ways to Reduce Costs for an Organization

Determine ways to create nonprice barriers to entry based on market structure. Larson ability to keep prices reasonable, but profitable he can cause his market structure to be nonprice in order for other firms to gain access. By Larson keeping his market structure non-price he can keep control on that market and control other competitors from coming and winning a geographical area. Larson could spend on marketing power.

If he can flood the media with his brand, this will cause the other competitors either to spend twice as much or not at all; and since they are out for a profit most likely, they will not spend on media.Flooding the media will also continue to keep Larson brand on the minds of consumers when in need of the product. Larson can also differentiate its product by quality and eco friendliness. Larson could also control and own resources to the production of the process and this will cause a block for competitors Larson can also put patents and licenses on his products. “A patent is the exclusive right of an inventor to use, or to allow another to use” (McConnell, Brue, & Flynn, 2009, p. 203).Employing too many or not enough people to work for the company can cause a company financial problems.

Hiring the wrong people can cost the company money on training, retaining, absence, turnover, firing and hiring new employees. Because of the time that is taking to train employees and the time it takes to reprimand a negative employee can cause the company money and time. Instead of focusing on the company and its production, the focus is on employees. Since production is the process of transforming inputs into outputs.Production cost can be reduced by properly training employees and having effective and working machinery, equipment and buildings. The land and labor is the capital of the business and it is considered the raw materials and supplies in the production process. If these items are not in proper working order and used wisely cost for the company will increase.

By Larson estimating materials, input needs and paying close attention the other cost of inputs and continually seeking to find less costly ways to produce the product.Inventory cost can be reduce, Larson needs to look over his inventory and make sure that he order exactly what he needs. He also needs to make sure that he shops around for better price. Operating cost is the overhead of the company for instance the rent, advertising, and supplies, insurance, taxes, furniture, license, electricity, and personnel wages. All these cost can be controlled if they are watched and controlled by making sure the rental is sufficient and not over spacious.

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