E.O.S and D.O.S Flashcards
(13 cards)
What are the economies of scale?
Marketing- Some marketing costs are fixed and can be spread over more units.
Technical- Larger factories more efficient due to more specialisation and more investment.
Managerial- Can employ more specialist managers rather than a general manager responsible for HR, finance, marketing etc.
Risk bearing- Wider product range and sell into a wider variety of markets.
Purchasing- Bulk buying (buying in larger quantities and receiving a discount)
Financial- Wider variety of sources to choose from and can borrow at more favourable rates.
What is marketing economies of scale?
Marketing- Some marketing costs are fixed and can be spread over more units.
What is technical economies of scale?
Technical- Larger factories more efficient due to more specialisation and more investment.
What is managerial economies of scale?
Managerial- Can employ more specialist managers rather than a general manager responsible for HR, finance, marketing etc.
What is risk bearing economies of scale?
Risk bearing- Wider product range and sell into a wider variety of markets.
What is the financial economies of scale?
Financial- Wider variety of sources to choose from and can borrow at more favourable rates.
What is the purchasing economies of scale?
Purchasing- Bulk buying (buying in larger quantities and receiving a discount)
What are the diseconomies of scale?
Bureacuracy- Too much administration and decision making is slow
Communication problems- different languages and cultures
Difficulties in control/coordination- More layers of management needed
Reduced motivation due to distance between senior staff and workers at bottom of organization.
What is bureaucracy diseconomies of scale?
Bureacuracy- Too much administration and decision making is slow
What is communication problems diseconomies of scale?
Communication problems- different languages and cultures
What is difficulties in control and coordination in diseconomies of scale?
Difficulties in control/coordination- More layers of management needed
What is reduced motivation in diseconomies of scale?
Reduced motivation due to distance between senior staff and workers at bottom of organization.
What are the external economies of scale?
All firms in an industry benefit from falling average costs as the industry expands.
Skilled labour- training costs lower, vocational courses tailored to that industry.
Infrastructure- roads, railways, ports developed to suit industry’s needs.
Access to suppliers- an established industry will encourage suppliers to set up close by. Specialist component, marketing, distribution services attracted to area.
Similar businesses- co-operate so all can gain. Eg high tech businesses in Silicon valley.
