What can negatively affect a firm’s cost structure when responding to local responsiveness pressures?

Customization of products and services can indeed negatively affect a firm’s cost structure when responding to local responsiveness pressures. This is primarily because customization often requires tailored production processes, unique marketing strategies, and potentially different supply chain management to meet the specific needs of local markets. Such adaptations can lead to increased operational costs, as the company may not achieve the same level of efficiency as it would with standardized offerings.

For example, producing a product that is specifically designed for a local market may involve additional research and development costs, as well as the expense of sourcing different materials or components. Moreover, if a firm produces smaller quantities of customized products, it may lose out on the benefits associated with economies of scale, where higher production volumes lead to lower per-unit costs.

While standardization of marketing and exploitation of economies of scale generally lead to cost reductions, customization can create complexities and additional expenses that adversely affect a firm's overall cost structure.