Re: The Scale of Business (longish)
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Duke,
"Now - am I just being stupid here with the idea that certain models can only work on a very large scale (while others can only work on a small scale), or am I missing something?"
While there are a lot of issues/obstacles with your specific idea, that general concept regarding businesses and scale is 100% on the money.
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Obviously the model must fit the scale. But he's still just basically saying to create a competitive advantage. His CA being economies of scale. I think a model for the fast food sushi could still be created that gave you a competitive advantage with only a single or small number of stores.
Starting a massive operation is obviously going to take a much larger amount of capital and involve greater risk. These are both negative factors. Also going from zero to a massive distribution/marketing/blah blah setup is going to be near impossible. This is why most restuarant franchises start as a single or small number of stores then expand after success is proven there. The only time that I can think of franchises just being created is when a company already has another franchise and starts more like pizza hut/taco bell/KFC.
Being a small operation can provide just as much EV as you would gain from your economy of scale idea. You will be able to put all of your effort into a single location and fix the kinks much quicker than if you had 100 stores. Also your overhead will be much lower with a single store than from having an entire management team.
In summary, it seems to me, the models must fit the scale of the business. However, two different models can be created for the same business but on two different scales.
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