A2 - Business - Operational strategies: scale and resource mix

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  • Created by: jkav
  • Created on: 08-01-16 11:04
Economies of scale
The benefits enjoyed by a firm as a result of operating on a large scale, leading to a fall in average costs.
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Diseconomies of scale
The disadvantages experienced by a firm as a result of operating beyond optimum output, leading to a rise in average costs.
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Purchasing economies
Benefit of buying on a large scale leading to lower average costs from suppliers.
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Technical economies
Ability of larger firms to buy technically advanced equipment and spread the cost over a larger number of units.
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Specialisation
The ability to employ specialists, e.g. accountants, and for staff to focus on one particular area of function.
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Average cost
Total cost divided by the number of units produced to give cost per item.
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Communication diseconomy
The breakdown in effective communication resulting from an increase in size of operations.
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Coordination diseconomy
The breakdown in effective coordination resulting from an increase in size of operations.
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Resource mix
The combination of capital and human resources utilised within a business to achieve the required output.
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Optimum resource mix
The combination of capital and human resources which allows for the greatest efficiency.
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Capital intensive
Businesses that rely more heavily upon capital equipment, e.g. machinery and computers rather than labour.
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Labour intensive
Businesses that rely more heavily upon labour, i.e. the workforce rather than capital equipment.
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Other cards in this set

Card 2

Front

The disadvantages experienced by a firm as a result of operating beyond optimum output, leading to a rise in average costs.

Back

Diseconomies of scale

Card 3

Front

Benefit of buying on a large scale leading to lower average costs from suppliers.

Back

Preview of the back of card 3

Card 4

Front

Ability of larger firms to buy technically advanced equipment and spread the cost over a larger number of units.

Back

Preview of the back of card 4

Card 5

Front

The ability to employ specialists, e.g. accountants, and for staff to focus on one particular area of function.

Back

Preview of the back of card 5
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