growth & evolution Flashcards
economies of scale
lower average costs of production as a firm operates on a larger scale due to improved productive efficiency
technical economies
using machinery and sophisticated capital to mass produce their products
financial economies
borrow large sums of money at lower rates of interest
managerial economies
specialisation for each department in a business (e.g. sole traders must cover the responsibility of all departments)
specialisation economies
division of labour of a workforce (individuals responsible for a single part of production process)
marketing economies
firm benefits from lower average cost, transaction costs and time savings by selling in bulk
purchasing economies
benefiting from buying in bulk
risk-bearing economies
savings can be spread to cover a firm’s fixed costs across a wide range of operations (especially for conglomerates)
technological progress
increases productivity level and reduce costs (e.g. e-commerce saves business from expensive rent)
improved transportation networks
improves delivery services, reduce traffic congestion, avoid late employees
skilled labour
gov’t training helps cut recruitment and training costs whilst maintaining productivity
regional specialisation
location/country is well-known for producing certain goods & services
bureaucracy
when important decisions are largely made by state officials, thus results in slower decision-making and added costs
mergers
when 2 or more firms agree to make a single company with its own legal identity
acquisition
when a company buys a controlling interest of another company with permission of BOD
