Page 13 - BrewDog Industry Analysis
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Economies of Scale Inputs:
Lower input costs: When a company buys inputs in bulk - for
example, potatoes used to make crisps, it can take
advantage of volume discounts.
Costly inputs: Some inputs, such as R&D, advertising,
managerial expertise and skilled labour are expensive, but
because of the possibility of increased efficiency with such
inputs, they can lead to a decrease in the average cost of
production and selling. BrewDog is in an industry
dominated by large brands which are backed by large
advertising budgets. BrewDog has to a great extent negated
these advertising budgets by not accessing the traditional
mass media advertising routes. Rather BrewDog has relied
on social media and word of mouth allied to disruptive
actions and product launches to unsettle the established
brands in the industry. If a company is able to spread the
cost of such actions as BrewDog can over an increase in its
production units, economies of scale can be realized.
Specialized inputs: As the scale of production of a company
increases, a company can employ the use of specialized raw
materials, labour and machinery resulting in greater
