Please enable JavaScript.

Coggle requires JavaScript to display documents.

Economies of scale - Coggle Diagram

- - - - Marketing
        
        As businesses grow, each pound (£) spent on advertising will have greater benefit for the business
      - Technical
        
        As businesses grow they are able to purchase the latest equipment and incorporate new methods of production
        
        This increases efficiency and productivity, reducing average costs of output.
      - Managerial
        
        As businesses employ specialist managers. These managers will know how to get the best value for each pound (£) spent in the business.
        
        This will increase efficiency and thereby reduce the average costs of producing goods and selling the goods or services on offer
      - Financial
        
        As the assets of businesses grow, they are able to offer more security when borrowing money which gives them access to a wider range of finance.
        
        As a result, larger businesses can often negotiate more favourable rates of interest on any money they do borrow.
      - Purchasing
        
        As businesses grow they increase the size of orders for raw materials or components.
        
        This may then result in discounts being given and the cost of each individual component purchased will fall.
        
        Reduces the average cost of production.
- - - - Supplier
        
        The setting up locally of supplier businesses, often in competition with one another, reduces buying costs and allows the use of systems such as Just-in-Time
      - Financial
        
        Financial services can improve, with banks and other financial institutions providing services that may be geared towards a particular industry.
      - Educational
        
        Local colleges will set up training schemes suited to the largest employers’ needs, giving an available pool of skilled labour.
        
        This reduces recruitment and training costs for those businesses who make up the industry concerned.
      - Services