Study on Economies of Scale

I went to a fancy french restaurant called “Deja Vu.” The headwaiter said, “Don’t I know you?” — Steven Wright

Economies of Scale

Below is a 27-page PDF on economies of scale. Yes, the document is repetitive, but you often have to read or hear something three times before the lesson sinks in. Economies of scale is one concept of competitive advantage that you must understand in order to improve your business understanding. Learn it.

We will tackle the Coors case study in a day or so.

Keep plodding along.

2 responses to “Study on Economies of Scale

  1. John,

    I was reading the PDF and I had a question about the early discussion related to pricing below competitor’s costs with a brand that demands a premium in the market. There was a suggestion that the premium brand is not able to arbitrarily price higher above the shared costs of the industry and earn outsize profits because this would invite competition, whereas when they lower prices closer to competitor costs, they’re still able to be profitable due to marketplace premium while denying competitors (potential and actual) the profitability they’d need to be incentivized to enter and compete.

    How has Warren Buffett been able to raise prices continuously on See’s candy? His competitors aren’t continually raising prices on their candy, are they? Why don’t these price increases become self-defeating and invite competitors?

  2. Pingback: Sees Pricing and EOS; Book Rec; Too big NOT to fail; Crony Capitalism; Obama Speech in Context | csinvesting

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