Everyone is watching his or her budget these days. Consumers want to get the most for their dollar. They shop around to see which company or store can give them that. For example, many consumers use eBay for their purchases for car parts because the price is cheaper than buying it directly from the store or dealer. Purchasing commodities online is becoming the way of the future.
One of the reasons that eBay can offer lower prices is because Internet companies have lower fixed costs, such as inventory, sales force, or warehouses.
Businesses in a recession ask the question continually how to survive?
The market can make it difficult for companies to compete because the products should be affordable to the target market without compromising on quality. One of the drivers of business success is cost competitiveness and companies are often finding that they have to change their practices in order to compete. Many companies are adopting the Internet as a key strategy for business success and are following the example of Internet companies like eBay. The business skill a manager needs is to benchmark companies that are showing successful practices like eBay. Whenever a company can improve a variable cost, such as energy, labor, process, capital etc. they have room to improve their own costings.
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