Ikea, the world's largest furniture retailers, benefits a lot from EOS. Therefore, the price of the products are really low. How do they manage to gain so much profits if the prices are so low through economic of scale?
Specialisation, is one of the many reasons that allow IKEA to gain benefit from economic of scale. It helps to speed up the process of manufacturing the products, and at the same time with specialization, more research can be done in order to improve the products.
Another way to reduce cost is to bulk buy. Bulk buying is when you buy a lot of materials and you get a special price for it - A unit price is lower than the normal price. IKEA can save a lot of money by bulk buying.
IKEA exploits EOS through advertising. Heavy advertising allows IKEA to earn more profits, because customers are going to buy IKEA products.
Because IKEA is the largest furniture retailer, it benefits from a financial point of view. Ikea can access loan at a much lower rate of interest.
Another way to reduce cost is to bulk buy. Bulk buying is when you buy a lot of materials and you get a special price for it - A unit price is lower than the normal price. IKEA can save a lot of money by bulk buying.
IKEA exploits EOS through advertising. Heavy advertising allows IKEA to earn more profits, because customers are going to buy IKEA products.
Because IKEA is the largest furniture retailer, it benefits from a financial point of view. Ikea can access loan at a much lower rate of interest.