Diseconomies Of Scale

Question 1

Explain morale

Answer 1

Industrial relations tend to be worse in larger firms, as the management becomes distant from the worker, meaning workers become less loyal to management and purposes of firm, so less productive

Question 2

Explain communication

Answer 2

Takes longer to communicate messages in large firms and greater chance of message being misunderstood or go to wrong person

Question 3

Explain coordination

Answer 3

Difficult to coordinate tasks in larger firms, minor error have greater impacts

Question 4

Explain control

Answer 4

More difficult to control/monitor workers in large firms particularly if they operate in different countries with different cultures, time zones, languages and hours of working

Question 5

Explain external diseconomies of scale

Answer 5

Occurs when too many firms within an industry in a specific location, results in pressure of infrastructure and factors of production e.g. more marketing costs as difficult for individual firm to be noticed