Growth and evolution

It occurs when unit costs fall as the scale of production increases

• Economies of scale

• Diseconomies of scale

It occurs when unit costs increase as the scale of production increases.

• Economies of scale

• Diseconomies of scale

What type of internal economy of scales is it? When a firm expands, it may be able to adopt different production techniques to reduce the unit cost of production

• Financial economies

• Managerial economies

• Marketing economies

• Purchasing economies

• Technical economies

What type of internal economy of scales is it? When a business gets bigger and has more assets, it may be able to borrow money at lower interest rates. Banks may be more confident that they can take assets if need be and so there is less risk of not recovering the money; this means they are likely to charge less interest.

• Financial economies

• Managerial economies

• Marketing economies

• Purchasing economies

• Technical economies

What type of internal economy of scales is it? When firms get bigger, they need to buy more resources. As a result, they should be able to negotiate better deals with suppliers and reduce the price of their components and raw materials.

• Financial economies

• Managerial economies

• Marketing economies

• Purchasing economies

• Technical economies

What type of internal economy of scales is it? When firms grow bigger, they are able to employ managers to specialize in different areas of the organization.

• Financial economies

• Managerial economies

• Marketing economies

• Purchasing economies

• Technical economies

What type of internal economy of scales is it? When a business expands, the cost of a media campaign can be divided over more units of sales, reducing the cost per unit and making bigger campaigns more feasible.

• Financial economies

• Managerial economies

• Marketing economies

• Purchasing economies

• Technical economies

What type of internal diseconomy of scales is it? When a firm gets bigger, it can become much harder to make sure everyone feels like a part of the organization. Senior managers are less likely to be able to stay in day-to-day contact with all the employees, and so some people may feel less involved.

• Coordination and control problems

• Managerial diseconomies

• Communication problems

• Motivation Problems

• Technical diseconomies

What type of internal diseconomy of scales is it? With more people involved in the business, it can be difficult to ensure that messages get to the right people at the right time. Although developments in information technology such as emails and intranets have helped, it can still be quite difficult to make sure everyone in a large business knows exactly what they are supposed to know, when they are supposed to know it.

• Coordination and control problems

• Managerial diseconomies

• Communication problems

• Motivation Problems

• Technical diseconomies

What type of internal diseconomy of scales is it? When the firm expands and sets up new parts of the business, it is easy for different people to be working in different ways and setting different objectives. It becomes increasingly difficult to monitor what is going on and to make sure everyone is working together.

• Coordination and control problems

• Managerial diseconomies

• Communication problems

• Motivation Problems

• Technical diseconomies