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Sunk cost. In economics and business decision-making, a sunk cost (also known as retrospective cost) is a cost that has already been incurred and cannot be recovered. [1][2] Sunk costs are contrasted with prospective costs, which are future costs that may be avoided if action is taken. [3] In other words, a sunk cost is a sum paid in the past ...
Cost reduction is the process used by organisations aiming to reduce their costs and increase their profits, or to accommodate reduced income. Depending on a company’s services or products, the strategies can vary. Every decision in the product development process affects cost: design is typically considered to account for 70–80% of the ...
Cost-shifting. Cost-shifting[1] is an economic situation where one individual, group, or government underpays for a service, resulting in another individual, group, or government overpaying for a service (shifting compared to the expected burden). [2][3] It can occur when one group pays a smaller share of costs than before, resulting in another ...
Boeing is now led by new CEO Robert “Kelly” Ortberg, who came out of retirement to take the job last month. The company has outlined a series of cost-cutting measures. Among them are: a hiring ...
The total cost curve, if non-linear, can represent increasing and diminishing marginal returns.. The short-run total cost (SRTC) and long-run total cost (LRTC) curves are increasing in the quantity of output produced because producing more output requires more labor usage in both the short and long runs, and because in the long run producing more output involves using more of the physical ...
Switching costs effect – the higher the product-specific investment a buyer must make to switch suppliers, the less price-sensitive that buyer is when choosing between alternatives. Price-quality effect – buyers are less sensitive to price the more that higher prices signal higher quality.
Escalation of commitment. Escalation of commitment is a human behavior pattern in which an individual or group facing increasingly negative outcomes from a decision, action, or investment nevertheless continue the behavior instead of altering course. The actor maintains behaviors that are irrational, but align with previous decisions and actions.
Part of this cost-cutting drive includes a 20% reduction in administrative personnel costs, which is likely to involve a significant reduction in Volkswagen’s 684,000-strong workforce at the end ...