What Are the Advantages and Disadvantages to a Firm of...

Q4) what are the advantages and disadvantages to a firm of operating on a large scale? Economies of scale fall under microeconomics and are the cost advantages a business obtains due to expansion. As scale is increased they cause a producers average cost per unit to fall. Microeconomics (from Greek prefix micro- meaning small and economics) is a branch of economics in which you study the behaviour of how the individual firms make decisions to allocate limited resources. Normally, it applies to markets where goods or services are being bought and sold. Microeconomics examines looks at how these decisions affect the supply and demand for goods and services, which determines prices, and how prices, in turn, determine the amount supplied†¦show more content†¦However larger firms have advantages in keeping prices higher because of their market power. Research and development economies are made when developing new and better products. A larger firm can be safer from the risk of failure as it has a more diversified product range. Moreover larger firm may have greater resilience in the case of a downturn in its market because of larger reserves and greater possibility to make cutbacks. External economies of scale are economies made outside a firm as a result of location. They come about when a local skilled labour force is available. Furthermore when specialist local back-up firms can supply parts or services. They can also come about because of a particular area having a good transport network; also if an area has an outstanding reputation for producing a certain type of good e.g. Sheffield is associated with steel. Indivisibility of Plant is when a machine can not be made to do more than the one particular job it is there for and is not viable to produce other products. Agricultural machinery appropriate for large scale work can be looked at under the principle of Multiples e.g. some production processes need more than one machine to create an end product or just to be fully efficient. Internal diseconomies of scale transpire when firms become too large and inefficient. As the firm increases production eventually the average costs begin toShow MoreRelatedIntegrative Problems and Virtual Organization Strategy Essay1064 Words   |  5 Pagesand recommend a strategy that is best for this company and what will benefit the company the most. It will discuss the strategies such as undertaking IPOs, merging with other companies and ways to get other companies, as a way to help their company to branch out. Some of the other things that will be discussed are the benefits and risks, the advantages and disadvantages of all the approaches that should be taken into consideration for what is the best way to strategy for the business, the strengthsRead MoreFive Forces Model Essay1499 Words   |  6 PagesProfessor Michael Porter of the Harvard Business School developed a framework that aids in the development of an organizations competitive advantage. Porter identified five basic forces that act on the organization; I. The bargaining power of suppliers; II. The bargaining power of buyers; III. The threat of potential new entrants; IV. The threat of substitutes; V. The extent of competitive rivalry. The bargaining power of suppliers. Suppliers can exert bargaining powerRead MoreMerger : An American Multinational Technology Company1114 Words   |  5 PagesMerger is the combining of two or more firms, generally by offering the stockholders of one company securities in the acquiring company in exchange for the surrender of their stock. Conglomerate is a kind of merger, a combination among two or more different companies, which focus on different business in the different market, as well as having no relationship in the productive process. Vertical Merger is the integration of the business which in the same industry but in the different step of supplyRead Moretech summary Essay examples1464 Words   |  6 Pagesproduce organizational change? †¢ Describe each of the four kinds of organizational change that can be promoted with information technology. 1ï ¼â€°Automation: improve efficiency and make manual steps not required 2ï ¼â€°Rationalization: Streamline standard operating procedures 3ï ¼â€°Business process reengineering: Analyze, simplify, and redesign business processes 4ï ¼â€°Paradigm shifts: Rethink the nature of the business and the nature of organization. †¢ Define business process management and describe the steps requiredRead MoreChallenges Faced By The New Competitors From Easily Entering A Market Or Industry Essay1336 Words   |  6 Pagesmarket are: - †¢ Supply side economies of scale: - These economies arise when firms produce large volumes that enable them to spread their fixed costs over more units so that they enjoy lower cost per unit. New entrants are deterred by supply scale economies of scale as they are forced to enter the industry on a large scale which requires them to dislodge competitors, or to accept the disadvantage in cost. Almost every activity of in the value chain has these scale economies but which one is importantRead MoreThe Global Economy Has Become More Competitive And Ambitious1391 Words   |  6 PagesThe global economy has become more competitive and ambitious as companies of all extent pursue to bolster and broaden beyond domestic borders. The Internet and knowledge technology are among circumstance that have made it achievable for smaller firms to endeavour toward foreign markets. Before making an international move, though, it is of benefit to figure out commonplace reasoning companies infiltrate the international business field. Sodden Domestic Corporation leaves limited opportunities forRead MoreBusiness Event Management : Function Of Planning, Analyzing, Marketing, And Evaluating An Event Essay1311 Words   |  6 Pagespeople-to-people interaction and have a clear perspective. Ensuring continued provision of service and associate ourselves with audience. MISSION: Event management is vital marketing tool to nurture bond with customers. The Paramount purpose is to organize large scale events, hold gala’s, formal luncheon and concerts to have a better collaboration with mass of gathering at once. It is mostly about communicating, preserve and develop customer as well as client relationships and assuring top-notch prospect serviceRead MoreMgt B399 Exam Paper1539 Words   |  7 Pagesstructure and controls can be a competitive advantage. Strategic controls (largely subjective criteria) and financial controls (largely objective criteria) are the two types of organizational controls used to successfully implement a firm’s chosen strategy. Both types of controls are critical, although their degree of emphasis varies based on individual matches between strategy and structure. Strategic controls are concerned with examining the fit between what the firm might do (as suggested by opportunitiesRead MoreThe Main Tasks Of A Financial Manager 1549 Words   |  7 Pagessignificant impact on individuals as well as companies nowadays. Knowledge about finance fills so many books to equip financial managers to create more benefits for the company. As a financial manager, one primary duty is maximising the wealth of the firm by making correct decisions. This report will focus on the three main tasks of a financial manager, name investment decision, financing decision and dividend decision. Firstly, we will state our understanding of these terms in detail. Then, severalRead MoreEcco a/S – Global Value Chain Management1709 Words   |  7 PagesCase 3 The International Firm in a Global Economy ECCO A/S – Global Value Chain Management Question 1: 1. Relate the Ecco case to the conceptualization of the organization as a global factory. What similarities and dissimilarities with the global factory conceptualization do you see and what solutions may it present? Similarities: As ECCO had been very successful in the footwear industry by focusing on production technology and assuring quality by maintaining full control of the entire