Explain briefly how economies of scale and scope can be Explain briefly how economies of scale and scope can be developed in production, marketing, finance, research and development, transportation, and purchasing. Explain briefly how economies of scale and scope can be
Explain briefly how economies of scale and scope can be
Explain briefly how economies of scale and scope can be developed in production, marketing, finance, research and development, transportation, and purchasing.
Explain briefly how economies of scale and scope can be
The cost advantage of expanding a business is called economies of scale. Unit costs begin to decline when a company grows in size due to:
Economies of scale in production and finance - Companies benefit from economies of scale when their production gets more efficient. Expanding output and lowering expenses are two ways to attain economies of scale. This happens because costs are spread among a larger number of commodities. It is conceivable to have both fixed and variable costs.
Economies of scale in marketing - from extending the fixed cost of marketing over a bigger amount of output
Economies of scale in purchasing - when large enterprises typically gain a discount since they are buying in bulk
administrative cost savings - resulting from spreading the fixed cost of management personnel and IT systems over a higher volume of production.
Economies of scale in research and development - from spreading the fixed expenses of generating new or improved items over a larger volume of output.
Economies of scale in transportation - When it comes to bulk transportation in the transportation industry, economies of scale play a part. The law of economies of scale expands the sales market through distance degression, whereas the transport object degression of unit costs amplifies both the inclination toward transport production concentration and the activity of transport consumers. The corporation or organisation will save money by carrying things in bulk rather than in little parts.
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