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Chapter 12: Operational strategies: scale and
resource mix 2/2/12 8:54 AM



> understand the concepts of economies of scale and
diseconomies of scale

Choosing the right scale of production
As a business expands, it will experience economies of scale and
diseconomies of scale

Key terms:
Economies scale ­ The advantages…

Page 2

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Chapter 12: Operational strategies: scale and
resource mix 2/2/12 8:54 AM


A small firm is unlikely to be able to pay a high enough salary to
attract the best staff, so larger firms should be more efficient.
Training to improve specialist skills is also easier in large firms
If staff…

Page 3

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Chapter 12: Operational strategies: scale and
resource mix 2/2/12 8:54 AM


It is more difficult to assess the needs of many individuals. Even if
motivational methods are used, it is less likely that the managers
will know the best approach for each subordinate.
In large firms there may be less…

Page 4

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Chapter 12: Operational strategies: scale and
resource mix 2/2/12 8:54 AM


In contrast, if products are specifically designed for the consumer, then
labour-intensive methods are more likely. The success of the business
will depend more on the workers than on machinery

The skills and efficiency of the factors of production…

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