In businesses, trade-off situations arise when targets or goals that seem equally important cannot be achieved fully, at the same time. In such situation, companies prioritize ne product or service as more important and necessary than others. As a result, they place more weight on this product or service and may support it with a part of profits allocated for the other products or services. Ultimately, the company seeks to capitalize on the high priority product or service more than the others.
For example, consider a case where Dreamwheels reduced the price of ZL model cars by 10% because the demand for the model was less than that of the other models. In this situation, Dreamwheels made a cost or price trade –off in order to reap the benefits of better sales and presence in the market.
Tradeoffs help business organizations stay in competition. Combining the right benefits and costs helps companies in devising alternative solutions for improving their business and increasing profitability.
