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What are Affiliated Chains?

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  • Written By: Tricia Ellis-Christensen
  • Edited By: O. Wallace
  • Last Modified Date: 18 November 2016
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Affiliated chains refer to stores, hospitals, retailers, and service industries that through affiliation increase their ability to more cost-effectively purchase through bulk buying, and advertising together. Most often you’ll see affiliated chains used to describe retail stores. For example, all the Macy’s® Department Stores in the country are affiliated chains. The key in this affiliation is that they do not compete with each other. The company that owns Mervyns® and Target® can be said to own two affiliated chains, since these two companies can be seen as competitors of each other. Generally to be an affiliated chain, the businesses don’t provide direct competition to each other.

You can sometimes see loose affiliation between stores grouped together in malls and strip malls. For instance, the malls owned by the Simon® Corporation are an affiliated chain of malls. The stores in the mall are for the most part in competition with each other, so their affiliation is much looser. Yet these stores may still benefit from being in a Simon® mall when Simon advertises their malls and increases foot traffic to them.

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In retail stores, the best aspect of affiliated chains is that they have much greater purchasing power. This is part of what is called the economies of scale. The more you buy, the less you spend per item on most things. If you can purchase 50,000 shirts of the same type to stock stores all over the country, you’ll spend much less in unit price than the single store that buys 15 shirts. This allows larger affiliated chains to confer lower prices to consumers, though not all do so.

In recent years, you will see references to affiliated chains of hospitals, convalescent homes and pharmacies. These affiliations do lower cost of equipment and supplies, which can help bring down health care costs. In general, the benefits of such chains is reduction in costs of supplies, and sometimes even of power. Prices for doctors and nurses at an affiliated chain hospital are not reduced.

There is some concern in regards to affiliated chain hospitals when the bottom line becomes cost consciousness and not patient care. Several large affiliated hospitals have been under fire for providing inadequate patient care. It’s a good idea to keep abreast of where the hospital you plan to use fits in a “chain,” and how this particular chain is regarded in terms of quality of care. Affiliated chains may have company wide standards or “bottom lines” in place that place economics before people under certain circumstances. Unfortunately the aims of business-oriented industries are not always altruistic.

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