Monday, 26 October 2015
3. Technical Economies
The larger firm can afford to use different methods of production.
Large firms can afford to employ specialist workers and machines. They can divide up the production process into specialized tasks so that production becomes faster as each worker becomes an expert in their particular job. In small firms thee are simply not enough workers or specialized machinery to make this profitable.
Large firms can also afford to research and develop new faster methods of production and new products. The costs may be high but it is spread out over a very large Output.
The larger the firm the more transport it needs to carry materials and products to and fro. As a firm grows in size it can afford to use large types of transport, like juggernauts, or, in the case of oil companies, supertankers.
4. Risk – bearing Economies
Running a firm is a risky business and clearly the bigger the firm the more things can go wrong. Therefore larger firms try to overcome this risk in a number of ways.
- Dan Moynihan & Brian Titey. (2015). Economics, A Complete Course for IGCSE and O Level: University of Cambridge International Examination.
Dan Moynihan & Brian Titey. (2015). Economics; A Complete Course for IGCSE and O Level. 2015. hlm 89