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4 production_diseconomies_of_scale

4 production_diseconomies_of_scale - tutor2u GCSE Business...

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tutor2u 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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