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Operations Management: Case Studies
Have a read of case studies about different types of businesses- from large companies like Amazon, to small, local businesses.
Amazon is a good example of a business that has benefitted from economies of scale. It started in 1995 selling books on the internet at a time when the internet was only just becoming more widely available to consumers. It may not have been the first but it did have a ‘first mover advantage’. Having developed the technology and distribution system to sell books in the USA it became comparatively straight forward to develop the product range into music and films before extending its range even further and expanding abroad. It has huge technical economies of scale from its large and technically developed warehouses. It can gain purchasing economies of scale from its massive buying power, enabling it to get large discounts. By having a good reputation as an online retailer it can also gain from economies of scope. This is where costs are lower for more than one product range. Over the years it has expanded organically through its own sales growth but also by taking over a number of smaller rivals. It has always had a reputation for an innovative approach to its processes but has increasingly brought out innovative products like the kindle.
Portakabin are a good example of a business that uses lean production. It makes temporary standalone buildings. It aims to eliminate waste and increase quality. As part of the philosophy of continuous improvement, all staff are encouraged to come up with suggestions for improving the process and the product. It is also accredited with ISO 9001- showing that it follows set quality procedures. Stock is only held when it is needed. It only produces to order so has no need of back up stock. To do this it needs well developed stock management systems and good relationships with its own suppliers. Portakabin has reduced waste in the manufacture of its buildings by having standard sized components only and pre-cutting them in the factory before being sent onto site. All this has enabled the company to reduce waste, increase the speed of construction and improve quality.
Enterprise Rent A Car
This is a good example of a business that needs to be near to its customers. Its main customers are businesses who need to hire cars regularly for their staff and individual customers who may need a car for a holiday or while their own car is being repaired. Enterprise will deliver cars to a business or pick up customers from any location and take them to a branch to pick up a car. Many customers prefer to go to a branch themselves so the location of these is important. Their main locations are city centres and airports.