economy of scale

In 100 words ore more reply to the statement below about economy of scale

Economies of scale give rise to lower per-unit costs for several reasons. First, specialization of labor and more integrated technology boost production volumes. Second, lower per-unit costs can come from bulk orders from suppliers, larger advertising buys or lower cost of capital. Third, spreading internal function costs across more units produced and sold helps to reduce costs. “Internal functions” include accounting, information technology, and marketing. The first two reasons are also considered operational efficiencies and synergies. The second two reasons are cited as benefits of mergers and acquisitions. Management technique and technology have been focusing on limits to economies of scale for decades. Today, Outsourcing of functional services make costs more similar across businesses of various sizes. These functional services include accounting, human resources, marketing, treasury, legal, and information technology. Micro-manufacturing, hyper-local manufacturing, and additive manufacturing can lower both set-up and production costs. Global trade and logistics have contributed to lower costs, regardless of the size of an individual plant.

 

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