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economies and diseconomies of scale - Coggle Diagram
economies and diseconomies of scale
Economies of Scale
As a business increases its size,
average costs start to fall
Disconomies of Scale
Rising average costs when,businesses become too big,Regulatory costsOffice politics,Rising costs of complexity
Control & Coordination
Increased need for supervision/management
Labour relations
Too many workers create lack of understanding
Bureaucracy
Too many resources/processes used in administration
Internal Economies of Scale
Cost benefits that an individual firm can enjoy when it expands(grows)
technical economies
financial economies
marketing economies
managerial economies
purchasing economies
risk-bearing economies
External Economies of Scale
Cost benefits that all firms in the industry can enjoy when the industry expands
skilled labour
Industry concentrated in one area,Training costs are lower,Schools will offer,vocational courses
infrastructure
infrastructure
Roads, buildings and infrastructure will be shaped by the needs of that industry
Ancillary and commercial services
Everyone in the area will benefit from these services
cooperation
Firms in the same industry are likely to cooperate with each other,They can share costs and benefits of research and development