Cell phone manufacturer LZT has to choose between two options for sourcing parts: Japan-based Keiko Inc. and US-based Global Tech. How can Keiko reduce the total customer cost for LZT?
A) by absorbing some risk by offering a warranty
B) by improving the functional aspects of the products
C) by augmenting the psychological benefits of the products
D) by training service personnel to improve their skills
E) by investing in brand building for the products

Question

Quizplus · Accepted Answer

By offering a warranty, Keiko can absorb some of the risk for LZT and potentially reduce their total customer cost. This could be a more cost-effective solution than improving functional aspects of the products or investing in brand building. Training service personnel and augmenting psychological benefits may also help reduce customer cost, but offering a warranty has a more direct impact on cost reduction.

Cell Phone Manufacturer LZT Has to Choose Between Two Options