Michael, Mehul, Talal, and Faisal. Fullers case study

Task 2:

· Capacity is relevant to this case study because fuller has increased the amount of beer that its selling by buying the Gales brewery. Gales brewery has been selling its beer to the local pubs and markets, when Fuller bought Gales brewery they started selling Fullers beer to the same pubs and markets. The local pubs will, most probably, not stop selling beer because of the buy-out. In theory, Fuller has increased its capacity because of the firm's capital assets. By buying Gales brewery, Fuller now owns another business that sells its product enabling it to expand its capacity.

· Economies of Scale can be relevant to this case study because Fuller scale of production/operations has increased due to the acquisition. Because Fuller now owns Gales brewery it has more people working and more equipment for production. Economies of scale are the advantages of larger scale production that results in lower cost per unit produced. Fuller in this case has gained economies of scale from their acquisition, and the acquisition has been proven to be good. As of September 2006, its profit has increased by a third to 10.9 million euros. This can also help Fuller to compete against other top beer brewers in its region.

· Fuller buying Gales brewery has given it access to supplies and distribution networks. Meaning that they don’t need a new mean of distribution for their beer in the local region. If Gales brewery was transporting the beer using trucks, or a specific transportation route, Fuller will be able to use the same route for distributing its beer. The beer that was being provided to the local pubs will now be changed, but the pubs have to sell beer meaning that they will be forced to sell Fullers beer.