INSTRUCTIONS: Please RESPOND to this answer from the Point of view as a student. Use credible sources and respond as if you are a manager of a marketing agency. Tell this student what your marketing agency would think of each of these answers from a Management perspective in about 4-5 paragraphs:
This week we discuss various drivers of low cost-advantages. A firm has a cost advantage if its cumulative cost of performing all value activities is lower than competitors’ costs. The sources of cost advantage are varied and depend on the structure of the industry. They may include the pursuit of economies of scale, proprietary technology, preferential access to raw materials and other factors (Dess, Lumpkin, & Taylor, 2006). A low cost producer must find and exploit all sources of cost advantage. If a firm can achieve and sustain overall cost leadership, then it will be an above average performer in its industry, provided it can command prices at or near the industry average.
Economies of Scale:
Economies of scale are the cost advantages that a business can exploit by expanding their scale of production (Carpenter & Sanders, 2008). The effect of economies of scale is to reduce the average (unit) costs of production. Economies of scale can be useful in various aspects of a firm’s operations such as:
- Purchasing- If you recall, a few weeks back, in chapter 4, we learned about supplier power and buyer power. A firm in an industry with a high degree of buyer power can purchase its inputs in bulk at negotiated discounted prices from its supplier.
- Specialization of the workforce – Firms can increase the specialization of managers. Beckman Coulter, being a larger company, can split complex production processes into separate tasks to boost productivity and by specializing in certain tasks or processes, the workforce is able to produce more output in the same time (Dess, Lumpkin, & Taylor, 2006).
- Marketing-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 buyer power in the market.
- Technological- take advantage of returns to scale in the production (Carpenter & Sanders, 2008). As a large-scale business, Beckman Coulter can afford to invest in expensive and specialist capital machinery. It might not, however, be cost-efficient for a smaller company to buy this technology.
Applying the learning curve concept will allow the managers to improve their performance process and lower costs. The main idea of the learning curve concept is that the time involved to complete a task will steadily decrease each time the task is performed, the decreased amount of time will follow a predictable pattern, and the time will decrease at a decreasing rate according to the task at hand (Carpenter & Sanders, 2008). The more repetitive the task, the better the adaption and the service of the customers will be. The organization should learn from the results of their processes as well as changes in product design, equipment, and administration.
The text mentions how the Learning Curve can be beneficial for multiunit organizations. As I’ve mentioned in my previous posts, Danaher Corp, the company that owns Beckman Coulter, succeeds by acquiring and integrating companies that will add to its capabilities system (Danaher Corporation, 2016). With owning over 40 companies, covering various industries, Danaher has access to a large reservoir of knowledge and resources. As Danaher acquires a company, it determines and adopts the processes that have proven to be successful and efficient, and incorporates it into its other businesses (Danaher Corporation, 2016).
Beckman Coulter. (2016, November 7). About Beckman Coulter. Retrieved from Beckman Coulter : https://www.beckmancoulter.com/wsrportal/wsr/compa…
Carpenter, M. A., & Sanders, W. G. (2008). Strategic Management: A Dynamic Perspective. Upper Saddle River, NJ, USA: Pearson Education, Inc.
Danaher Corporation. (2016). Danaher Business System. Retrieved from Danaher: http://www.danaher.com/our-culture/danaher-busines…
Dess, G. G., Lumpkin, G. T., & Taylor, M. L. (2006). Strategic Management (2nd Edition ed.). New York, NY: McGraw-Hill Irwin.