diseconomies of scale

Question 1

when do diseconomies of scale occur?

Answer 1

when a business grows so large that the costs per unit increase. As output rises, it is not inevitable that unit costs will fall, Sometimes a business can get too big

Question 2

why do diseconomies of scale occur all together?

Answer 2

all as a result of managing a larger workforce

Question 3

why is poor communication bad in diseconomies of scale?

Answer 3

-as a business expands between different departments the chain of command can become more difficult
-more layers in hierarchy that can distort message and wider spans of control for managers, can result in workers have less clear instructions form management
-may be more written communication and less face-to-face meetings, can result in less feedback therefore less effective communication

Question 4

why is lack of motivation bad in diseconomies of scale?

Answer 4

-worker scan feel more isolated and less appreciated in a larger business
-hard for managers to stay in day-to-day contact with workers, making it difficult to build a food team environment
-lack of motivation can lead to damaging consequences for output and quality

Question 5

what is the main result of poor employee motivation?

Answer 5

• falling productivity levels
• increase in average labour costs per unit

Question 6

possible solutions for lack of motivation?

Answer 6

• delegation of decision-making (empowerment)
• making jobs more interesting (job enrichment)
• splitting employees into teams (team working)