occur when there is a fall in average total cost as the scale of produvtion increases
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internal economies of scale
occue due to an increase in the scale of production of a firm
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external economies of scale
occue due to an increase in the scale of production of a firm
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eg's of economies of scale
purchasing economies- discounts for bulk-buying. technical economies-the use of specialist, often exspensive capital eg machines
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technical economies of scale
Technical economies of scale: Large-scale businesses can afford to invest in expensive and specialist capital machinery.
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managerial economies of scale
managerial scale economies increase productivity by employing specialists to supervise production systems.
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external economies of scale
imply that as the size of an industry grows larger or more clustered, the average costs of doing business within the industry fall. ... These are generally referred to as positive externalities; industry-level negative externalities are called extern
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diseconomies of scale
diseconomies of scale are the cost disadvantages that firms and governments accrue due to increase in firm size or output, resulting in production of goods and services at increased per-unit costs. ... The rising part of the long-run average cost cur
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market power
the extent to which a firm can control price and costs in a market
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monopoly
exists when there is only one firm in the market
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brand recognition
branding is promotional method that involves the creation of an identity for the business that distinguishes that firm and its products from others
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internal growth-organic
growing a business by either opening new business or new product development including diversification
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extwernal growth-inorganic
this is the use of mergers or takeovers to increase a business
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internal contraction
this is the the form of making a business smaller by either delayering or closing down unprofitable elements of the firm
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external contraction
this is the form of selling off elements of a business to make it smaller
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firms grow because.....
to meet objectives such as gaining market share or increasing shareholder value or responding to external forces such a stechnological advancements political and legal change or changes in consumer demand.
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integration
the bringing together of two or more firms
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merging/merger
when two or more firms agree to become integrated to form one firm ender joint ownership
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takeover
when one firm gains control over another and becomes the owner, can be achieved by buying 51% of the shares in a business
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horizontal integration
occurs when two firms at the same stage within a process integrate eg two car munufacturers
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vertical integration
occurs when two firms at different stages within a process integrate eg car munufacturer merges with a tyre supplier
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conglomerate integration
occurs when two unrelated firms integrate eg car munufacturer merges with a book store
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reasons for inorganic growth
secure supplier, secure outlet, gain foothold, benefit from expertise, brand recognition,
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innovation
creating something new in business terms -the idea or developement for a new product or pr
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produvt innovation
addapting a product that already exists
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patent
product that you have designed
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differentiation
being able to offer a product or service that stands out from the competition
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process inovation
changing a process of production that already exists or putting into a practice a brand new production process
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Other cards in this set
Card 2
Front
occue due to an increase in the scale of production of a firm
Back
internal economies of scale
Card 3
Front
occue due to an increase in the scale of production of a firm
Back
Card 4
Front
purchasing economies- discounts for bulk-buying. technical economies-the use of specialist, often exspensive capital eg machines
Back
Card 5
Front
Technical economies of scale: Large-scale businesses can afford to invest in expensive and specialist capital machinery.
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