Economies of scale

Financial economies of scale

Large firms can benefit from cheaper loans and wider sources of cheap finance (investment from shareholders)

Marketing economies of scale

The advantages that large firms can get in relation to buying and selling. Large firms can attract specialist buyers who don’t waste money buying stock that will not sell. They also have specialist sellers/marketing staff who ensure that goods will sell. Big firms benefit significantly from buy-in-bulk

Technical economies of scale

These are the advantages that large firms have when it comes to the production process. Large firms can employ specialist labour and capital which stimulates productivity and reduces average costs.

Managerial economies of scale

Large firms have the money/resources to attract the most productive/efficient/specialist managers who make the most effective business decisions and increase efficiency overtime.

Risk-bearing economies of scale

Large firms benefit from having wider, more diversified product range. This means that they are better able to withstand the risk of a fall in demand for one good or service