Please respond to each students post using references.
Vanessa: Know the links in your value chain analysis, it is important to fix the weakest link. The value chain is describes the internal activities a firm engages in when transforming inputs into outputs (Rothaermel, 2021). Although this a great definition; I had to KISS (Keep It Simple for Smarties) it. The VCA definition, I found that best described it was a “Value chain analysis is a tool that business owners use to break down each process their business uses. This analysis can be used to improve the business’s individual processes, enhancing the company’s efficiency and establishing a competitive advantage.” Value chain analysis can create change within a business, improve the products and services it offers, and expand connections with other companies and their customers or clients (What is Value Chain Analysis?, 2022)..
In context with my favorite small owned BBQ restaurant; I focused on operations activities. Let’s SMOKE some meat, y’all! Good food coupled with great customer service is a formula for success.
Bowlegged BBQ purchases their meats and side ingredients from local markets and wholesalers at business cost.
BBQ and side items are prepared daily. “When the Food is Gone, We are Gone (Bowlegged BBQ, 2022).” After 5 years in business, they have a good formula on how much food to prepare based on sales. Hours of operations are 11am – Sold Out
Meat is smoked for 2-3 Hours with a “Secret” Dry Rub. Head smoker would not disclose his wood mixture. (Stance, 2022)
Now in relation to Economies of scale which occurs when more units of a good or service can be produced on a larger scale with (on average) fewer input costs (Rothaermel, 2021).
The strength relies in keeping it all in the family. The Stance family has a strong business background in varied fields and industries from business ownership (non-restaurant), marketing, communications, and education. There is sense of quality of 3 generations and family sentiment in every plate and with the friendly staff. (Bowlegged BBQ, 2022)
In addition, the meat and food items are prepared in-house and nothing is outsourced. Since this is a family-owned company, the labor costs are decreased with young adults (family members) working as servers and kitchen assistants. Executive Chef and Pitmaster are partial owners and family. Cost savings ALERT! Average Executive Chef salary in San Diego, CA is $79,717 as of May 27, 2022, but the range typically falls between $67,941 and $96,381; although, salary amount was not disclosed the chef and head smokers are less than labor outsourcing and salary varies upon profit (Executive Chef Salary in San Diego, California, 2022).
This is a PRIME example of this definition; Economies of scale are cost reductions that occur when companies increase production. The fixed costs, like administration, are spread over more units of production. Sometimes, a company that enjoys economies of scale can negotiate to lower its variable costs, as well (Amadeo, 2021).
Patrick: Economies of scale describes, “Decreases in cost per unit as output increases” while economies of scope, on the other hand, are described as, “The savings that come from producing two (or more) outputs at less cost than producing each output individually, even though using the same resources and technology” (Rothaermel, F. 2019). While at first the new concept of economies of scope was a little hard to differentiate from economies of scale, it essentially boils down to multiple products being cheaper, assuming they use the same resources, and more units becoming cheaper as more are produced. Another new concept for me was diseconomies of scale, or the point in which costs increase per unit as output increases. This is logical once the law of diminishing returns is applied and considering that economies of scale have a limit given any practical application.
I bought a new golf driver last weekend as an early graduation present to myself so I decided to write about the small company that I bought it from. According to their website the company has five locations. After speaking with the employees they confirmed that on average each location has less than ten full time employees which would make them a small local business. Pro Golf Discount leverages economies of scale by buying multiple clubs at a time and selling them at a discounted price, relative to their competition. A great example of them leveraging economies of scale is the fact that they had drivers from last year that were heavily discounted as they carried that large level of inventory into the next year. They were discounted because they had so many from the previous year, which they bought at a discount due to the order of magnitude of their purchase order from manufacturers, but they also applied a father’s day discount to sales across the shop. In this sense I was reminded of how a large business like Wal Mart is able to leverage economies of scale driven from the volume of their purchase orders. Although Pro Golf Discount doesn’t necessarily produce the products they were selling, their business model was that of a retail outlet in which they procure their raw products and then sell them “as is”.
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