Strome Business Minute With Dr. Jeff Tanner

Economies of scale drive business – the bigger an operation is, the lower fixed cost per unit of production. Take Smithfield – the bigger a pork production plant, the fewer people per slaughtered pig. The same with a ship –bigger ships mean lower operating costs per container. Greater operating efficiencies lower costs and improve profits. COVID changes that. As global trade declined, shipping companies anchored empty ships but the move to giant Panamax ships has hurt their cost structure. In Smithfield’s case, it’s largest plant closed when employees got sick. If that plant been split up into five plants, they might have had to close one or two but production could have continued. Post-COVID, business will have to figure out how bigger can be better. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.