• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Small vs Large Organizations. Economies of scale might not always benefit the customers.

Extracts from this document...


Question 1.7.1 Small versus large a) Economies of scale might not always benefit the customers. One way in which "economies of scale" is a disadvantage to customers would be economies of scale leading to less "personalized services". Less personalized services is a result of "economies of scale" because the large firms that usually take advantage of economies usually have a large customer base. This large customer base would prevent the firm from completely knowing the needs of individual customers. On the other hand, a smaller firm would have fewer customers and they would get to know their customers a lot better. Another disadvantage that "economies of scale" have on customers would be it leading to "barriers to entry". Barriers to entry are a disadvantage because it leads to less firms joining a market and therefore lead to less "competition" in a market. Less "competition" in a market would usually mean higher prices for customers. ...read more.


Small businesses continue to thrive and survive without "economies of scale" for multiple reasons. To begin with, small businesses may sometime be businesses in a small niche market. A small niche market would usually be overlooked by larger firms that are after larger markets. This would prevent the "competition" for the business in general and allow it to have local monopoly power. By having local monopoly power, the business would be able to control the prices completely and would not need "economies of scale" to help it earn more profit. Second of all, small businesses can also receive government aids/subsidies. These just like economies of scale would help drive down the average production cost but without the costs involved with expanding a business to take advantage of economies of scale. Lastly, small businesses can thrive and survive without "economies of scale" because they have better "cost control" and less "financial risk". These are advantages because larger firms that take advantage of "economies of scale" usually have less "cost control" and can encounter diseconomies of scale which could put them in financial risk. ...read more.


A monopoly over a market is against the best interest of the public since it allows firms with a monopoly to fully control the prices in a market. This is bad because this would allow a firm to make as much of a profit as it wants without much opposition. On top of that, a large business may also use "economies of scale" to operate against the interest of the public. It can use "economies of scale" to operate against the interest of the public by using it to create "barriers to entry" and prevent competition. which again leads to higher prices for the public. Lastly, large businesses can also operate against the public by it caring more about the profits and the "efficiency" of production than the quality. This is against the best interest of the public because this could mean products that are of a lower quality. All in all, large businesses pose both an advantage and a disadvantage to the general public. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our International Baccalaureate Business Studies section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related International Baccalaureate Business Studies essays

  1. Case Study Timmings plc, a small engineering firm.

    (c) Why do you think Timmings plc switched to capital intensive production? Capital intensive production has several advantages and disadvantages, it generally gets more cost effective if larger quantities are produced, but it has huge set up costs.

  2. New business plan

    Therefore, our positioning focuses not only the delicious and unique "Shan" cuisine, but also the culture experience cohesive to the eating process. We aim to "Connecting Chinese ancient culture with the modern dietetic art". 2.10.2 The Marketing Mix Product Our product is a unique Chinese royal cuisine with costume service

  1. BP Financial analysis

    Some projects that were scheduled for start-up between 2010 and 2015 may be sold to pay for the Gulf of Mexico oil spill (see Appendix B in Section 9). Reserve replacement ratio % 4.2 Profitability Revenue Between 2005 and 2008 BP's total revenue increased as the rising cost of oil guaranteed more money per barrel produced.

  2. Corruption in India. This study focuses only on the corruption experienced by the ...

    important as actual experience particularly in the case of these public services, and experience of actually paying bribe to get attended to or serviced by these public services. An overwhelming majority of citizens are vocal about absence of transparency and accountability in the delivery of these services.

  1. starting a small business

    The type of ownership that it is going to be is a partnership with another person. Salon Information Address 79 Belgrave Rd Ilford Essex IG1 3AL Phone Number 02085582905 Email Zainabshair&beauty@hotmail.co.uk Website: www.zainabshair&beauty.com Task 2 Pass Criteria 2 Questionnaire 1.

  2. How does an international chain hotel and individual hotel operate differently ?

    and culture for travelers to be eye-opening so staying in an independent hotel is more able to enhance culture exchange between travelers and locals. Finally, I still have to mention that independent hotels are better in making eco-friendly to the environment, because they are a small business and rely on

  1. Does raising prices always result in more profit?

    To be simple, here we analyse the IT service business only based on their changes of demand responds to changes of price. Other things equal, we know by the law of demand that a higher price usually results in decreasing their demand.

  2. Questions on Globalisation and International Trade

    What kind of system is it moving towards today? What are the impediments to completing this transformation? b. How might widespread public ownership of businesses and extensive government regulations have impacted (i) the efficiency of state and private businesses, and (ii) the rate of new business formation in India during the 1947-1990 time frame?

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work