SCALE OF OPERATIONS

What is scale of opertaions

the maximim outout that can be achieved using available inputs

what factors influence scale of operations

owners objectives

state of the economy

availability of resources

capital available

number of competitors

scope for scale of economies

what are the sources of finance

venture capitalist

bank loan

debenture

mortgage

government grant

retained earnings

debt factoring

what is internal economies of scale

factors that cause reductions in unit aveerage osts of production as the business expands scale of operations

what are the types of economies of scale

purchasing

technical

financial

marketing

manegerial

what is purchasing economies

“bulk buying”

substabital discounts for large orders

what are technical economies

flow production lines wanted at high capacity levels

what are fiancial economies

interest rates increased for big businesses

what is internal diseconomies of scale

factors that cause unit cost of production to increase when a business increases its scale of operations

what sre the factors causing internal diseconomies of scale

communication problemsalienation of workforce

poor coordination

MBO, DECENTRALIZATION

REDUCED DIVERSIFICATION

What are external economies of scale

factors causing unit cost reductions that can benefit a business

external diseconomies of scale

factors causinh unit costs to rise as an insudtry expands