Describe the external economies of scale, Financial Management

In the 2000s the German discount chain Aldi began an expansion on the east coast of Australia. One strategy of Aldi is to encourage small retailers such as butchers, bakers, delicatessens, chemist shops, newsagencies, dry cleaning and petrol retailers to locate close to Aldi stores. This is because Aldi has a narrow product range with only about 600 product lines compared to Coles’ average of 30,000 lines. Most of Aldi’s lines are private label produced only for Aldi, which is one of the key reasons why Aldi can compete with the huge buying power of Coles and Woolworths. Aldi encourages the small retailers to set up close to its stores to help offset the disadvantages arising from its narrow range of lines. 

Questions

Using the concept of external economies of scale, summarize Aldi’s objective in encouraging small retailers to set up close to Aldi stores.

Describe the external economies of scale for Aldi and the small retailers that can arise from an increase in customer traffic and sales.

Describe the internal economies of scale for Aldi if the availability of a wide range of small retailers adds to the customer traffic for its stores.

Posted Date: 2/28/2013 4:36:24 AM | Location : United States







Related Discussions:- Describe the external economies of scale, Assignment Help, Ask Question on Describe the external economies of scale, Get Answer, Expert's Help, Describe the external economies of scale Discussions

Write discussion on Describe the external economies of scale
Your posts are moderated
Related Questions
Learning outcome to be assessed: analyse financial statements to make decisions on the strength and adaptability of a business. A numerical analysis of the financial statements of

Operating Budget It is a collection or set of formal financial documents that details expected expenses and revenues, as like all other expected operating and financial transac

Accounting Period - Accounting Principle Accounting period refers to span of time at the end of that and for which the financial statement are prepared to throw light on the r

Advantages of Floating rate notes: We know that the coupon rate is fixed for fixed rate bonds and that throughout its tenure the investor receives coupons at a predetermined in

what is logical process modelling? what is physical modelling?

Will you please give the defination of "Future Value Of An Annuity"?

Working capital cycle in a manufacturing business Average time raw materials are in stock (raw materials/purchases x 365 days)   Plus   Time

Johnson & Johnson (JNJ) is trading at 68.15 (Sep 12th 2012 close). JNJ is a large health care conglomerate. It has done well so far this year (though not as well as the market) and

The net income of Novis Corporation is $45,000.  The company has 20,000 outstanding shares and a 100 percent payout policy.  The expected value of the firm one year from now is $1,

how would you judge the potential profit of bajaj electronics on the first year of sales to booth plastics and give your views to increase the profit ?