Diseconomies of scale Flashcards
1
Q
What do diseconomies of scale do?
A
They make unit costs increase as scale of production increases
2
Q
Why do diseconomies of scale occur?
A
Because larger businesses are harder to manage than smaller ones
3
Q
Why do businesses become less efficient?
A
Due to poor coordination
4
Q
Why can it be harder to communicate in larger businesses?
A
Due to long chains of command.
5
Q
Why is it harder to motivate in bigger firms?
A
Because the managers usually aren’t in close contact with workers. They don’t ‘belong’.
6
Q
What are diseconomies of scale caused by?
A
By problems with management
7
Q
How can diseconomies of scale be prevented?
A
By strong leadership, delegation and decentralisation.
