KitchenThings Inc. is a company that manufactures plastic kitchenware. It operates at an output level that allows it to keep its unit cost per output to the lowest in the industry. This in turn allows KitchenThings to be the price leader. Other competing companies cannot operate at the same level due to a lack of consumer demand for their products. This puts them at a competitive disadvantage. In this scenario, the cost driver behind KitchenThings's strategic position is superior customer service. availability of complements. learning-curve effects. economies of scale.

By definition, the concept of economies of scale is a state when the cost of production is saved by producing a larger quantity of output. With each additional unit of increase in the production level, the per unit cost of output is decreased providing the organization with economies of scale.

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