IIT Achieving Economies of Scale and Value Proposition Discussion
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1.
2.
Review all classmates’ posts, and choose two to comment on.Try to select classmates who do not yet
have feedback so that everyone receives feedback.
In your response to each classmate, please comment as if you were a manager for that
firm, answering the questions below:
a. Think about the market signal achieving economies of scale can create, through decreased
prices or other related results. Describe three (3) signals that this could create in the market.
b. How might competitors react to the company achieving economies of scale? What market
signals might competitors create in response?
c. How would achieving economies of scale strengthen the firm’s competitive advantage? What
would the impact be?
Note: Be sure to refer to the Discussion Board General Information – Requirements and
Guidelines (posted in Module 1 Activities and Assessments folder) to guide your discussion responses.
To post your response, open the discussion (by clicking on the title), then on the next window, click Create
Thread. Hint: you may wish to copy/paste the discussion questions into your response box so that you can place
your response next to each questio
Discussion Board Post
Achieving Economies of Scale
Post 1.
Module 4-Discussion A -Wendy’s. J.W.
COLLAPSE
The company I am discussing is Wendys.
Wendys is the third-largest fast-food restaurant global. The companys business model uses
local teams instead of geographical divisions. The company has a legal department, accounting
department and a Marketing department. From these groups, all of the companys directives
and policies come from here.
The company also handles all global concerns from the restaurant and regional offices at the
corporate level. At the bottom level is the local teams whose progress and enterprise are based
on Wendys corporate standards at the bottom level.
The 3 largest hamburger chains in the US are Mcdonald’s, Burger King, and Wendys.
According to Statistica, McDonalds spend 1.62 billion on advertising with Burger King and
Wendys spending around 2 and a half million. Sure! Wendys doesnt have the same menu as
the other two but in my opinion, they are happy just being the 3rd largest without spending all of
the money that the other two. Where Wendys has an advantage is on their menu, they have
managed to offer fresh salads where the other two have tried and failed. The generation that we
live in, consumers are looking for healthy alternatives to burgers. Even though Wendys offers a
great burger, they have also managed to offer healthy options.
So when it comes to the Economies of Scales and researching their business plan, it appears
that they will happily stay in the 3rd spot as long as they are maintaining a healthy balance sheet
which appears to be the case since they showed a net income of over 117.8 million dollars at
the end of 2020.
http://panmore.com/wendys-organizational-structure-characteristicsanalysis#:~:text=Wendy%E2%80%99s%20has%20a%20functional%20organizational%
20structure.%20This%20organizational,divisions%2C%20the%20company%20uses%2
0a%20centralized%20management%20structure.
https://www.restaurantbusinessonline.com/financing/largest-burger-chains-us
Post 2.
Taya A.
Post 2.
Module 4 Discussion
COLLAPSE
1.
2.
3.
Choose a company to use for this discussion. The company can be a U.S. firm, or a firm from
any country that is easily researchable using Internet search engines. You may use the same
company that you have used in previous discussions, or you may choose a different company.
Nike, Inc.
Using the web, familiarize yourself with the company (review their website as well as recent
news about the company related to the company’s business operations, market share, or
overall profitability).
Nike, Inc. is an American multinational corporation that is engaged in the design,
development, manufacturing, and worldwide marketing and sales of footwear, apparel,
equipment, accessories, and services. The company is headquartered near Beaverton,
Oregon, in the Portland metropolitan area.
Explain the company that you have researched, and its business model (i.e. how it makes
money).
Customer Segments:
? Nike markets to anyone who wants to buy athletic and sports apparel, footwear, and
equipment. Geographically speaking, Nikes market is divided into four main
divisions, also in order of revenue:
1. North America
2. EMEA (Europe, Middle East, and Africa)
3. Greater China
4. APLA (the Asia Pacific and Latin America)
Value Proposition:
? Nike offers products to inspire anyone to become an athlete. Their products heavily
rely on the quality, innovation, and status of the brand. This is the foundation of the
brand and it is exactly what the customers seek when they buy a Nikes. Nike offers
a great variety of items, for many different sports and activities.
? Producing products that has been heavily studied and developed from the best raw
materials and technology available.
? Carry the successful reputation since athletes such as Michael Jordan, Tiger Woods,
and Cristiano Ronaldo speak for the company.
Channels:
? Brick-and-mortar stores, especially the Nike-branded ones. The company has an
extensive sales network, with 1,152 physical stores throughout the world.
? E–commerce platform, which serves more than 45 countries.
Nike employs other channels, such as social media, digital, print and TV advertising,
brand events, and heavy sponsorship of athletes and teams.
Customer Relationship:
? The relationship with the customers is practically restricted to self-service.
? FAQ session on the website and customer support via phone, e-mail, or live chat.
? Nike also has Nike ID which is a personalization service that brings Nike products
closer to customers desires.
Revenue Stream:
? The revenue streams of the company are the sales of its products: footwear, apparel,
equipment, and accessories. The total revenue has reached $44.5M in 2021 thus far.
Key Resources:
? Physical Structures
? Human Resources
? Intellectual Property
Key Partners:
? Nike relies on outsourced contractors to manufacture as there are more than 145
footwear factories and over 400 apparel factories, mostly outside the USA.
? Other partners include some universities and institutions in North America, Europe,
and Asia for sports and scientific researches.
Cost Structures:
? Inventory and warehousing- $21 billion per year
? Marketing- $3 billion per year
? General and administrative expenses- $500 million per year
Describe how the company could achieve economies of scale in its business. Apply the concept
specifically to your chosen company.
Nike can ensure that their suppliers perform at the most competitive levels by implementing
a performance measurement system.
Manufacturing Index (MI)
This index monitors quality, cost, delivery time and sustainability, and is frequently
monitored each period. Suppliers who fall below a certain threshold which they call the
bronze level have their contracts nullified.
What macroeconomic and microeconomic factors are related to the company’s ability to
achieve economies of scale? In other words, what factors would increase or decrease the
company’s ability to achieve economies of scale?
Sneakerhead Culture (Micro):
? Nike’s partnerships with professional athletes has contributed to the rise in global
development.
Political Transparency (Macro):
? Nike being able to enter the market in different countries and adapt to their
standard practices of business to push sales across the globe.
?
4.
5.
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Tags:
Economies of Scale
Production cost
Value Proposition
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