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ACCA Applied Knowledge · Business and Technology · Technological factors

A music retailer stops selling physical CDs and instead offers customers access to a catalogue of songs through a monthly subscription over the internet. Which feature of technology's impact on products and services does this BEST illustrate?

The scenario illustrates digitisation: a physical product (CDs) is replaced by a digital service delivered over the internet on subscription. It is not vertical integration or manufacturing economies of scale, because no supply chain ownership or physical production is involved.

  1. ADigitisation of a product so that it is delivered as an online serviceCorrect
  2. BVertical integration of the retailer with its suppliers
  3. CUse of a cost leadership strategy through economies of scale in manufacturing

Explanation

Moving from physical CDs to streamed access means the product itself has been converted into a digital service delivered online. Vertical integration concerns owning stages of the supply chain, and the scenario says nothing about that. Manufacturing economies of scale are irrelevant because no physical product is made.

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