Describe the external economies of scale, Financial Management

Assignment Help:

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.


Related Discussions:- Describe the external economies of scale

Accounting for financial instruments, The IASB is in the procedure of under...

The IASB is in the procedure of undertaking a comprehensive review of accounting for financial instruments, and has issued a latest financial instruments standard referred to as IF

Brief the term directors and managers, Directors and managers While dir...

Directors and managers While directors and managers are in concentrate attempting to promote and balance the interests of shareholders and other stakeholders it has been argued

Cash dividend, what is amount of cash dividend if investor buys share of 1...

what is amount of cash dividend if investor buys share of 100 at premium of 400.

Describes net operating income approach to capital structure, Q. Describes ...

Q. Describes Net Operating Income Approach to Capital Structure? NOI (Net Operating Income Approach):- This is another speculation of capital structure which is propounded by '

Sensitivity analysis, A division of Saron plc is considering introducing a ...

A division of Saron plc is considering introducing a new product.  The product is the result of work undertaken by the division's research and development department - the expendit

How does continuous compounding benefit an investor, How does continuous co...

How does continuous compounding benefit an investor? The effect of enhancing the number of compounding periods per year is to increase the future value of the investment.  The

The main characteristics of debt and equity, QUESTION i) Distinguish be...

QUESTION i) Distinguish between intermediated and market finance using illustrative examples. ii) Differentiate between the main characteristics of Debt and Equity. iii)

Explain about centralised treasury function, Q. Explain about Centralised t...

Q. Explain about Centralised treasury function? Treasury departments are usually a feature of larger companies than Frantic although it is perhaps beneficial to consider the be

Accounting standards, Accounting Standards The paradigm shift in the e...

Accounting Standards The paradigm shift in the economic environment during last few years has led to increasing attention being devoted to accounting standards as a means towa

Return payment method, when asked to calculate return method given cash flo...

when asked to calculate return method given cash flow before depreciation how do you do it

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd