Management at Granger Industries is evaluating the company's distribution system to determine if cost-cutting measures will impact performance.Ralph, an employee with experience in annual cost-cutting negotiations, suggests the company consider synergies between elements of the distribution system instead of judging each activity on its own merits.What is Ralph trying to avoid with the cuts?

Question

Quizplus · Accepted Answer

Ralph is suggesting that the company consider the interactions and dependencies between different elements of the distribution system, rather than evaluating each activity in isolation. This approach is aimed at avoiding suboptimization, which occurs when a focus on cost-cutting or efficiency improvements in one area leads to unintended negative consequences in another area. By considering synergies, the company can identify opportunities to improve overall performance and reduce costs without sacrificing other important goals.

Management at Granger Industries Is Evaluating the Company's Distribution System