Economies of scale are reductions in average
costs attributable to production volume increases. They typically are
defined in relation to firms, which may seek to achieve economies of
scale by becoming large or even dominant producers of a particular type
of product or service. A distinction can be made between internal and
external economies of scales. Internal economies of scale occur when a
firm reduces costs by increasing production.
economies of scale can be achieved by geographic balanced portfolio of business , this is reffered to as diversification .
vertical integration is used as a way to enhance power ,it occurs when a firm owns business units that makes inputs and other business units i the same firm. a firm first confirms if a firm will provide competitive advantahe. this is done by comparing what other organizations are doing.
Apr 13th, 2015
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