How can a company reduce its costs?how can a large-scale firm might be able to reduce its cost and so reduce price?
By purchasing various elements of a production process, a company might lower its costs and reduce or control its prices. For instance, if a certain retail coffee corporation were to purchase coffee bean farms in Central America to grow its own coffee beans, it will tamp down the wholesale costs of green coffee beans.
In the last five years, green bean prices have risen as much as one hundred percent on the wholesale market. If a corporation were to own its own bean farms, that price jump would have a far lesser impact on the corporations prices, allowing for a competitive advantange.
A large-scale frim needs to take advantage of ecoomies of scale. The larger you are, the cheaper some things can be. Avoid two much vertical supply chain though, because you don't want to stretch your business too thin trying to do everything yourself.
Another way for a large firm to reduce costs is to mechanize. Companies can often reduce their costs by finding some ways in which to replace human employees with machines. The machines may cost a lot initially, but they cost less in the long run.