As a firm grows the average cost of advertising per unit will fall, leading to lower average costs. e.g., small firms are unable to afford large scale advertising campaigns, while their larger competitors are able to finance television and radio campaigns. b) Explain two reasons why McDonald’s will be able to achieve more marketing economies of scale than GBK. McDonald’s is the market leader in the UK; the company is a much bigger firm than GBK with 1,225 UK outlets. A large firm can spread its advertising and marketing budget over a large output and it can purchase its inputs in bulk at negotiated discounted prices if it has sufficient
A higher sales revenue will occur for etisalat which means the income the company receives from business activities, usually happen from sale of goods and services to customers. Etisalat will also have more opportunities to invest in upcoming projects. If the opposite occurs and etisalat has low availability and higher costs it would mean, people spend less on their goods/services which would mean there’s a low
It will benefit from cheaper transportation costs from their warehouse. These benefits are greater than drawbacks which include higher salary costs,
3. People often feel that tariffs, quotas, and other import restrictions will save jobs and promote a higher level of employment. But trade restrictions that reduce the volume of imports will also reduce exports. Question 4: What do researchers have to say about the relationship between firm’s productivity and exposure to global competition? Answer: Question No.5: When is international trade an opportunity for workers?
The differences over cost driver between LG and TORK are mainly come from the followings, please see below: Design: LG uses the plastic parts which the weight is lesser than Tork steel’s part and also the cost are cheaper. Moreover, the assembled times of LG are faster than Tork along with the wages rate of LG are lower. In conclusion, LG are cheaper and faster than Tork Geography: The freight costs of LG are significantly higher due to requiring ocean freight and shipping to distribution centers, whereas Tork relies on trucks and trains. However, LG enjoys a large wage advantage in Korea. Facility: LG has higher manufacturing volume based on they has an advantage from scale of economies by purchasing lots of material and got the discount on the prices.
Dyson invests heavily in Chinese and Asian manufacturing in order to make their products more cheaply, so they can maintain profit margins. This emphasis on design in their organizational planning means not as many products go out, but what they do sell they can sell to a specialized market for higher prices. Given the innovation that is present in Dyson’s business strategy, it is quite clear that their strategic capability is high, though their risks can be high as well, due to the experimental and ‘out there’ nature of their products, which may be too daunting for normal consumers. 2 To what extent do you think any of the
In poorer countries, globalization brings the chance to sell their relatively low cost labor onto world markets. It brings the investment that creates jobs, and although those jobs pay less than their counterparts in rich economies, they represent a step up for people in recipient countries because they usually pay more than do the more traditional jobs available there. In addition to this, information via the internet is available to many people because of globalization. The case studies book mentions the specific example of the Darfur crisis. Because of globalization and the access to information, attention was able to be drawn to the cause and help put a stop to it.
A few of the most significant advantages of outsourcing include: Cheaper Labor Possibly the most well known reason to consider outsourcing is to access cheaper labor. Workers in developing countries are paid far less than workers in developing countries due to the lower cost of living. Often these workers are not unionized as well, which further helps with cost cutting. Cut Operating Costs Even though your outsourced work must be paid for, often the costs are cheaper than if your company performed the operation itself. Lower salaries are a part of this benefit, but it goes much deeper.
3. What is reshoring? Why some companies are reshoring manufacturing in the United States? 4. How Bangladesh can benefit from rising costs of production in China?
Similarly, the transaction cost for stores such as H&M is more than that of the jewelry shops but less than the department stores. Also, it is much harder for a business enterprise to internalize if it has high transaction cost. Thus, jewelry shops can internalize at an easier way as they have comparatively lower transaction costs. Since, jewelry shops can internalize in an easier way, theoretically, they should make more money. And it is only fair that the shop that makes more money has to pay more rent.