What are the advantages of multiple organisations?

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1. Low prices:

Goods are sold in multiple shops at relatively low prices. The profits of middlemen are eliminated and there is direct contact with the consumers. Operating costs are also low.

2. Economies of scale:

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Centralised and bulk buying results in lower costs benefits of specialisation and centralised management are available. There is economy in advertising as one advertisement is sufficient for all the multiple shops. Due to uniformity of operations, one good branch serves as an advertisement for other branches.

3. Large turnover:

Multiple shops sell goods of daily use. Nearness to consumers and low prices help to increase sales. Large sales turnover means low selling costs per unit.

4. No bad debts:

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As goods are sold on cash basis, there are no bad debt loss and need for working capital is reduced.

5. Convenience in shopping:

Multiple shops are located in all important areas. Therefore, customers are not required to travel long distances for making purchases. They can easily identify the shops due to uniform decoration and display. Prices are fixed and no bargaining is necessary.

6. Flexibility:

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Shortage of goods in one shop can be met by transfer of goods from another branch. Loss making shop can be closed down and new branches can be opened as and when necessary. Product not selling in one shop can be shifted to other shops.

7. Diffusion of risk:

Loss suffered in one shop can be compensated from profits of other shops. Lack of demand in one area does not affect the sales of other shops.

8. Public confidence:

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Multiple shops enjoy public confidence due to fixed prices, standard quality and uniform appearance. Consumers can easily identify the shops due to uniform outward appearance display.

9. Effective supervision and control:

All the stores uniform work under uniform policies laid down by the head office. Therefore, head office can exercise effective supervision and control over all the stores.

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