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GCSE Business Studies
Dis-economies of scale
Increasing the size of a business does not always result in lower costs per unit.
Sometimes a business
can get too big!
Diseconomies of scale
occur when a business grows so large that the costs per unit increase.
Diseconomies of scale occur for several reasons, but all as a result of the difficulties of managing a larger
workforce.
Poor communication
As the business expands communicating between different departments and along the
chain of
command
becomes more difficult.
There are more layers in the hierarchy that can distort a message
and wider
spans of control
for managers.
This may result in workers having less clear instructions from
management about what they are supposed to do when.
In addition, there may be more written forms of communication (e.g. newsletters, notice boards, e-mails)
and less face-to-face meetings, which can result in less feedback and therefore less effective
communication.
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- Spring '10
- N/A
- Management, Economies Of Scale, Business studies, GCSE Business Studies
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