International Chemicals, Inc., is in the design phase of a new additive that will improve the adhesion of exterior house paint. The market for such additives is extremely competitive and International has determined that its selling price cannot exceed $20 per unit. At this price, the company has determined that a cost gap of $8 per unit exists. To proceed from the design to the attainment phase for this additive, International Chemicals will:

Question

Quizplus · Accepted Answer

To close the cost gap and meet the market price, International Chemicals will likely need to redesign the product or its manufacturing process to reduce the actual cost to the target cost, rather than exceeding market price, abandoning the product, or reducing the target cost which is already determined by market conditions.