Economies & dis-economies of scale

1. List out 3 advantages a business would enjoy as they grow bigger. 2. Identify the following into economies and dis-economies of scale Economies of scale Purchasing economies Financial economies Managerial economies Technical or technological economies Dis-economies of scale Poor communication weak coordination lack of commitment Poor motivation 3. Match the correct economies dis-economies of scale to its explanation. Poor communication larger the organisation the more difficult it becomes to send and receive accurate messages Weak coordination It often takes longer for decisions made by managers to reach all parts of a large business and different groups of workers Financial economies Bank managers often consider that lending to large organisations is less risky than lending to small ones. Purchasing economies When businesses buy large numbers of components, for example, materials or spare parts, they are able to gain discounts for buying in bulk