Economies of scale in organizationsThe Coordinator of the International Master MBA in Business Administration and Management and Professor of the Official University Master in Integrated Logistics and International Trade , Lorena Quidiello, talks to us in this post about economies of scale.
To explain this term in a simple way, we can say that economies of scale refer to the following relationship: with increases in production volume, total long-term costs decrease.
In this post we are going to refer to two important economies of scale:
Division and specialization of labor.
Use of advanced techniques or technologies.
The division and specialization of labor in companies cryptocurrency data provides a series of advantages that have always been recognized by economists and society in general.
Let us imagine a small factory that employs only a few workers. It is clear that it will not be able to specialize in the operations carried out as quickly as would happen in a larger plant that will employ a larger workforce.
In a small factory, the worker will perform various functions in the manufacturing process of a good. It may happen that he is not efficient in some of them, and also, the fact of leaving a certain set of tools to take another that is necessary to carry out a different activity, will mean loss of time.
In larger factories, workers generally perform the activities for which they are most suited , which will result in greater specialization of the worker, who will acquire greater skill and speed with their experience.
In this way, we can say that, in general terms, in large production plants the efficiency of the worker is greater, and therefore the cost per unit of product is lower .
It is also of interest to note that there may be cases where such specialization reaches such a point that a task becomes too monotonous , and the worker's efficiency begins to decrease.
Furthermore, there comes a point at which increases in plant scale will become less effective , as certain limitations or difficulties will arise in the control and coordination of the various activities, which causes what is known as " diseconomies of scale ."
In this case, management begins to lose contact with the most routine tasks, begins to delegate its work and responsibility, paperwork increases, management becomes more complex, costs begin to increase, and the cost per unit of product begins to rise .
On the other hand, the use of advanced techniques also leads to a reduction in unit costs , and this is amplified when larger scale plants are considered. Thus, for larger plant productions, mass production methods can be used that allow unit costs to be reduced .