Economies of scale advantages

Advantages of entrepreneurship in the economy - Thus, while a decision to increase its scale of operations may result in decreasing the average cost of inputs (volume discounts), it could also give rise to diseconomies of scale if its subsequently widened distribution network is inefficient because not enough transport trucks were invested in as well. Thus, when an industry's scope of operations expands due to, for example, the creation of a better transportation network, resulting in a subsequent decrease in cost for a company working within that industry, external economies of scale are said to have been achieved. And organizational inputs: with a larger scale of production, a company may also apply better organizational skills to its resources, such as a clear-cut chain of command, while improving its techniques for production and distribution. More units of a good or a service can be produced on a larger scale, yet with (on average) fewer input costs, economies of scale (es) are said to be achieved.

economies of scale

Management, technical and purchasing. See also ECONOMIES OF SCALE PART 2 on the LearnLoads YouTube Channel.