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
When a company commits (implicitly or explicitly) to granting at-the-money options to employees in the future then we can view them as a forward start options. a) Explain the di

Explain how management goals are incorporated into pro forma financial statements. Management locates a target goal, and forecasters produce pro forma financial statements within

Cost of Retained Earning: - It is on occasion argued that retained earnings carry no cost since a firm isn't required to pay dividend on retained earnings. Nevertheless this isn't

APPLICABILITY OF OPERATING CYCLE

Purchasing and discounting of bills is the most important, from in which a bank lends without any collateral security. Present day commerce is build upon credit. The seller draws a

Develop a scenario for the future growth of the firm e.g. through using a SWOT analysis to identify an appropriate outcome (this will be covered in lectures) • If it is to grow

Q. What is Deferred Incomes? Deferred incomes are incomes received in advance before supplying goods or services. They represent funds received by a firm for which it has to su

A Life Insurance Company invested $10,000,000 in pure-discount U.S. bonds in May 1995 while the exchange rate was 80 yen per dollar. The insurance company liquidated the investment

The assets and liabilities of S Harrison as at 30 June 2012 are: On 1 July 2011 when the business commenced, Harrison owed $58,000 on the land and buildings and $1,200 on

Treasury securities are government bonds issued by the US Treasury Department. These are issued through the Bureau of the Public Debt. They are debt-financing ins