Business Studies: Diseconomies of Scale


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  • Created by: izzy
  • Created on: 29-06-12 15:02

Diseconomies of Scale

This it what happens when a firm becomes too large.

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Diseconomies of scale causes problems of:

  • Communication
  • Coordination
  • Control
  • Low morale of workers.
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Although there are benefits to being big, not all firms are. This is because:

  • The total market might be small.
  • The market may just be local.
  • Some services require personal attention (eg hairdressing), and if you're too big you lose the personal touch.
  • The market may be specialist.
  • The owner wants to keep control.
  • Lack of money to expand.
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