Which of the following best illustrates how complements can create value?

The choice that best illustrates how complements can create value is the scenario where a new software enhances hardware performance. In strategic management, complements are products or services that, when used together, enhance the overall value to the consumer.

In this case, the software acts as a complement to the hardware, improving its functionality and effectiveness. This synergy can lead to increased customer satisfaction and loyalty, as users experience better performance and capabilities than they would with either product on its own. For businesses, the combination of high-performing software and hardware can lead to greater sales opportunities, as customers seek to maximize the potential of both products when they are used together. This illustrates the fundamental concept of complementarity in strategic management, whereby the combined use of goods leads to increased overall value.

The other options do not represent the concept of complements creating value. Lowering competitor prices does not involve the enhancement of a product's value through complementarity, but rather focuses on competition. Reducing production costs impacts a firm's margins but does not directly correlate to enhancing value through complementary offerings. Lastly, an increase in raw material prices affects cost dynamics but does not illustrate any benefits derived from complementary products working together.