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Tuesday, August 16, 2011

Exercise 5 - 5 Economies of Scale

Cube Cafe

A potential business I would created would be a coffee shop named Cube Cafe. It will sell products such as a variety range of coffee, light snacks and desserts. Location for this cafe would be in downtown where it will receive customers throughout the day.

The size of this cafe would be at least medium so that it could serve to minimum of 30 people at full capacity. As a cafe, this would be in the food industry targeting a wide range of different consumers. These kinds of consumers would be the kind looking for a quick drink or a light meal.

The Long-run costs would franchises as well as the size of the store. Securing products for the cafe would also be a long-run cost. The short-run costs would be labour and lease. Fixed costs would be utilities of the cafe.

A similar business would be Starbucks, a well known coffee shop in North America.
Strengths: Quality coffee
Weaknesses: High prices
http://www.starbucks.com/

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