Diseconomies of scale

Question 1

What is diseconomies of scale?

Answer 1

when a business grows so large that the costs per unit increase.

Question 2

Internal- poor communication

Answer 2

As the business expands communicating between different departments and along the chain of command becomes more difficult

Question 3

Internal-Lack of motivation

Answer 3

Workers can often feel more isolated and less appreciated in a larger business and so their loyalty and motivation may diminish

Question 4

Internal- loss of direction

Answer 4

It’s harder to ensure workers are aiming for the same goal as the business grows. It is more difficult for managers to supervise their subordinates and check that everyone is working together effectively, as the spans of control have widened.