Economies of Scale
Purchasing Economies: Companies producing on a large scale should be buy raw materials in bulks.Companies will be able to cut out wholesalers by buying direct from producers.and as well transport cost of per unit will be reduced.Companies might also buy in large quantities to make very specific demands about product quality.So that being said that the supplies will exactly match their needs.
Marketing Economies: They are more options available for large companies to advertise such as television and other advertisement options which would not be cost-effective for smaller producers. The marketing cost for selling 10 million items might be no greater than to sell 1 million items. Larger firms might find it easier to gain publicity for new launches simply because of their existing reputation.
Financial Economies: There is more than one range of finance option available for a company. Such options could be stock market, bonds and other kind of bank leading.Furthermore, large companies are more likely to be perceived by banks as a lower risk and cost of borrowing are more likely to be lower.
Managerial Economies: Large companies can usually afford to have specialist manager for different area within the business. Such options can me Marketing, Finance and Human Resources.To attract best people for the job is able to pay high salary to the workers, however this people can lead to better planing and decision making, which most definitely will lead the company to great success.
Technical Economies: Certainly is will be more cost-effective to invest in more and advanced production machinery. IT and software to will certainly help large companies to organized the company well better.
Marketing Economies: They are more options available for large companies to advertise such as television and other advertisement options which would not be cost-effective for smaller producers. The marketing cost for selling 10 million items might be no greater than to sell 1 million items. Larger firms might find it easier to gain publicity for new launches simply because of their existing reputation.
Financial Economies: There is more than one range of finance option available for a company. Such options could be stock market, bonds and other kind of bank leading.Furthermore, large companies are more likely to be perceived by banks as a lower risk and cost of borrowing are more likely to be lower.
Managerial Economies: Large companies can usually afford to have specialist manager for different area within the business. Such options can me Marketing, Finance and Human Resources.To attract best people for the job is able to pay high salary to the workers, however this people can lead to better planing and decision making, which most definitely will lead the company to great success.
Technical Economies: Certainly is will be more cost-effective to invest in more and advanced production machinery. IT and software to will certainly help large companies to organized the company well better.
Dis-economies of Scale
Human relations: For large companies it is certainly really difficult to organize huge amount of employees.The business will usually find itself spending more time on communicating to each other than to develop the business. Large companies will have long chains of command and instructions that will take a longer time to reach the desired destination.Even worse the might be distortion in the message that is pass for people to people. In large is it very hard to contact between decision maker for the company and also certain high level staffs.This can also be lead to low level of morale. and workers lack of motivation.
Decision and co-ordination:
External Dis-economies:
Decision and co-ordination:
External Dis-economies:
Source
Business Notes