Economies of scale - Holden plc

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  • Created by: sam124
  • Created on: 28-03-15 12:05
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  • Economies of scale
    • Purchasing
      • Buying an order in bulk. Reducing the cost per unit.
        • Holden may benefit when ordering materials to manufacture, such as fabric.
    • Technical
      • When a firm has access to the latest tech. Allowing them to produce more goods in the same time period.
        • Reducing the cost per unit
    • Risk- bearing
      • When a firm sells a range of products. They spread the risk of failure of several products.
        • Holden: if the demand for bean bags drops, they still have cushions to sell.
    • Marketing
      • Access to mass media when advertising. Their message reaches more customers, reducing the cost of advertising per customer
        • Holden are unlikely to benifit!
          • Case study tells us that they use advertise via a website and exhibitions.
    • Financial
      • Discountd interest rates for large firms. Reducing the cost of interest per pound borrowed.
        • Holden can benefit if they move back to Bowton.
          • They might decide to borrow money for a mortgage or loan, so they can get lower interest rates.


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