Vertical Boundaries Of the firm - Vertical Chain and Vertical Essay - 1

Vertical Boundaries Of the firm - Vertical Chain and Vertical Integration - Essay Example The main operational uniqueness of this brand is that it follows a production after order placement module. In this mode of operation, the customer chooses the product and the design and the workers develop the product according to the choice, delivering the finished furniture in a couple of weeks time. The company has a production unit in Birmingham from where furniture orders placed in its twelve showrooms throughout Britain are produced and shipped. This arrangement gets excellent response from customers who do not mind the waiting time, since they know that the piece going to be delivered is going to be unique and customized for their needs. The great rush of orders and the company’s plan to move to new markets brought out different challenges in vertical chain and production management. To begin with, the firm has decided to open new stores or showrooms in five different cities that they have not been in before. And this would bring in orders that the Birmingham production unit cannot handle. In this scenario, the 30 employee production unit will either need to be doubled in capacity, which might affect the quality of the products or the firm has to think of traditional vertical chain management techniques. The company has operated using the Neoclassical Economics model till date since due to its small size and promising performance, a good number of shareholders and venture capitalists are interested and influential in its growth. However, when they move into real vertical chain system, they will have to ensure that they follow the Quasi Marris economic model which is more fit for the 21st Century, and ensure that behavioral factors are taken into consideration every time. The economy of scale here will be determined by the number of households, offices and complexes which use teak wood furniture or are open to