3. Think of an example of a value chain activity that is sensitive to scale economies...

3. Think of an example of a value chain activity that is sensitive to scale economies and one which is not. Critically discuss the reason for this difference. (130 words)

Expert Solution

. Value chain activities involves five primary activities like inbound logistics, operations, outbound logistics, marketing and sales and service. The support activities include procurement, human resources, technology development and firm infrastructure. Here, the following example can be suggested

· Consider a marketing strategy that is innovative and is modelled based on the current economy on a frequent basis. Here, we can say that such an activity is always sensitive to economies of scale as the cost benefits could be obtained due to reshaping of marketing strategy in accordance with the persisting economic conditions.

· Consider the support activity of servicing in a value chain process. Here, the cost of servicing cannot be avoided at any instances of economic condition and hence it does not depend on the variations in the economy and hence is non-sensitive to economies of scale.

Rahul Sunny answered 2 years ago

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