In January 2006, the market for postal services was opened up to competition thus ending the monopoly of the Royal Mail in the delivery of letters to households and businesses. Attention is now focusing on some of the likely rivals to the Royal Mail in the newly competitive market. One such business is TNT logistics. TNT Express Services was established in the UK in 1978, the company has developed its dominant position in the time-sensitive express delivery market through organic growth and, with an annual turnover in excess of £750 million. TNT employs 10,600 people in the UK & Ireland and operates more than 3,500 vehicles from over 70 locations. TNT Express Services delivers hundreds of thousands of consignments every week - in excess of 50 million items per year.
(Source: TNT investor relations web site)
This is a simple example of the economy of scale. Why the economy of Scale is important to the TNT company ? In the competition of delivering services, the most important point to be successful is fast, and cheap. By increasing amount of employees, vehicles in a large area, TNT they can improve their speed and amount of delivering, make them become more competitive. They might to exploit the technical and marketing economy of scale, to increase their competitive
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