• thinkigcse.com

Diseconomies of Scale

These are the drawbacks of being a big business. In other words, all the factors those lead to an increase in average costs as a business grows.
Diseconomies include the following:

Human relations

It is difficult to organize large number of employees. The business might find itself spending too much on communication. There might be long chains of command and instructions will take a long to reach the desired destination. Moreover there might be distortion in the message. There will be less personal contact between decision makers and staff, which can lead to low level of morale, lack of motivation and ultimately industrial relations problems.

Decisions and co-ordinations

There could be coordination problems. With a larger hierarchy, both the quality of information reaching from the management to the workers and vice versa could lead to poor decision making. There would be considerable paperwork and many meetings.

External diseconomies

Recently, consumers have become more conscious of the activities carried out by big firms. Therefore, big firms have to spend a lot of money on environmental issues and social responsibility act. These ultimately lead to higher average cost per unit.

Exciting News!

IMPORTANT MESSAGE

Quizzes and worksheets on this website have been developed in Flash format. Flash is no more supported by browsers. Therefore, you might see blank pages on some instances. Install Flash player plugin for Chrome from Chrome Web Store. Click here 

Similarly, for other web browsers you will have to activate the relevant flash player plugins.

JOIN OUR ONLINE COURSES

New Youtube Channel - ThinkIGCSE

Hi Everyone, I have launched a new YouTube channel with more than a 100 videos on  Economics and Business Studies, tailored specifically for IGCSE and A Level and IBDP students.

Subscribe now and join us on this learning journey: @thinkIGCSE

WHO'S ONLINE

We have 291 guests and no members online

Crosswords

PDF FILE

Download

MindMaps

PDF FILE

Download

Save
Cookies user preferences
We use cookies to ensure you to get the best experience on our website. If you decline the use of cookies, this website may not function as expected.
Accept all
Decline all
Read more
Analytics
Tools used to analyze the data to measure the effectiveness of a website and to understand how it works.
Google Analytics
Our website uses Google Analytics to understand how you interact with our site and improve your browsing experience. These cookies collect information in an anonymous form, including the number of visitors to the site, where visitors have come from, and the pages they visited. The data helps us analyze trends and user behavior to enhance our website's functionality and content.
Accept
Decline
Marketing
Set of techniques which have for object the commercial strategy and in particular the market study.
Marketing
Our website uses Google marketing cookies to deliver personalized ads and measure the effectiveness of our advertising campaigns. These cookies track your online activity to help us show you relevant ads on Google services and partner websites.
Accept
Decline