The economies of scale, defined as the reduction in cost per unit resulting from increased production realized through operational efficiencies, constitute one of the key goals for firms to improve their competitiveness. But this productive model seems to be in the same time contradictory to the individual and specific customer relationships that firms try to follow. Indeed, involved in an industrial network, they have to take up the challenge and find a balance between economies and standardization on one hand and adapted products and customized relationships on the other hand. How could they achieve this goal and what are the implications of this opposition on their activity links? The following development, based on Håkansson and Snehota´s model in “Developing Relationships in Business Networks” (1995) and on Richardson´s analyze in “The organization of industry” (1972), tries first to demonstrate how activity links have consequences on the division of labor and how firms have to deal with a large sense of activity.
[...] The key point is to determine which relationships are strategic for achieving economies of scale. After analyzing and highlighting an efficient division of labor, firms have to act uppermost on the activity links which can be source of economies of scale and differentiation. In this view, Richardson well identified one type of activity that is a source of economies of scale for industries, the similar activities. According to him, firms have to specialize activities for which capabilities offer comparative advantages”. [...]
[...] Industries improve their suppliers and customers relationships to offer always better services and products. Thus, activity links oriented on the final product, appear as a continuous movement. The relationships have to be monitored and adapted continuously to fit with the wider network, the environment and the customer demands. Step by step toward the best but not optimal activity links, firms mold their relationships to reach economies of scale. This view is particularly developed in the Håkansson and Snehota´s model, which presents activity links as continuum. [...]
[...] Indeed, firms, focused on their final products, are involved in various activity links with their suppliers and customers that they have to design in an efficient division of labor to protect their business and generate economies of scale. Thus, firms have to well analyze their division of labor and to build up adapted links to reach economies of scale and differentiation in the same time. Consequently, activity links imply an exchange of know how between the two partners and an implication of both sides to reach efficiency. [...]
APA Style reference
For your bibliographyOnline reading
with our online readerContent validated
by our reading committee
