Economies of Scale

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  • Economies of Scale
    • Marketing
      • Large companies can afford to spend a lot on advertising.
      • the total cost for the advent is spread across a large number of stores/ products.
    • Techincal
      • large companies can afford new machinery.
      • produces more units at a faster pace.
      • improves quality
    • Financial
      • Able to borrow money easier as there is less risk to the financial organisation
        • Less risk means that banks charge lower rates of interest.
      • Less risk means that banks charge lower rates of interest.
    • Specialisation
      • large firms can afford to pay for specialists in every functional area.
    • Research and Development
      • large companies can spend more on research and development
      • they can also afford specialists in design and innovation
    • Social and Welfare
      • large companies can afford to other benefits to the employees.
      • Consequently they are able to gain higher quality staff who are less likely to take work off unnecessarily.
    • Purchasing
      • large companies can afford to buy in bulk.
        • thye have the space to store it.
      • thye have the space to store it.
      • the turnoverr of stock is large enough to avoid damage, wastage and obsoletion.

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