Purchasing Factor - Large firms can gain discounts on their products by bulk buying. An example would be having a shirt printing business where if the business buys a lot of plain t-shirts to print on to, the seller would make the price of each shirt a lot cheaper.

Financial Factor - Large firms would have easier access to to credit facilities compared to smaller firms. An example would be that if an international retail shop would want to loan money from the bank, there is a higher possibility that the bank would let the international retail shop to get the loan compared to a small local retail shop wanting to loan from them.

Technical Economies of Scale:

It focuses on captial inputs. To apply this the Business first needs to be big and it needs to have a certain amount of money because it is only cheaper when we focus on the average. For example doubling the width and height of the warehouse might be expensive in the beginning but the business can produce more products what increases their output.

Managerial Economies of Scale:

Larger Businesses can hire specialist staff for certain parts of the business whilst smaller businesses only hire one person which is not as professional as a specialist one for every part of the business.

Risk-Bearing: Risk-bearing economies of scale is about the cost of product line failure.

A product line can go out of fashion, a competitor releases a better version, etc.

The risk-bearing economies of scale factor suggests that when a business is big with many different product lines the risk of it failing is smaller than a businesses with less product lines, because if one individual product line of a big business fails, the other product lines might be successful. In a small business with only a single product line the chance of it failing is much bigger.

Risk-bearing:

The risk-bearing factor of economies of scale focuses on the cost of a product line failing. This can be seen when a company with a vast product line has a lesser risk of all their products failing at once rather than a company with a smaller product line who has a higher chance of their product failing. This makes it a significant problem for a smaller company as they do not have another product line to save their business.

Marketing: When businesses benefit from promotions when buying a large amount of output. For example major food retailers will have buying power when buying from farmers and other suppliers, because they buy in large amounts.

Marketing economies of scales: It is all about spreading fixed costs. These are brought about when large companies can actually run marketing campaigns collectively.

Example: If you spend £100 on a national tv advertising campaign it is only worthwhile if you are a big national company like Starbucks or Coca Cola. If your output is small, the average cost of the advertising is much higher

Financial: For example, companies can save money when it comes to transporting or storing raw materials, since the average cost per unit is much lower.

Risk-Bearing

The risk-bearing part of economies of scale is more to-do with larger businesses, This is when the company contemplates on creating a product that has a high risk of failure. The risk of the product failing gives the company the ability to say their making a risk-bearing product, this is a label for a product that has a chance of failing. This would be a big disadvantage for smaller co

Marketing is spreading the fixed cost of promotion over a larger level of output.for example if a marketing campaign cost 1000dollars. If you sell 100 of the product the marketing campaign will only cost 10dollars per product. Bigger companies if they sell 1000 of the product the marketing campaign will only cost 1 dollar per product

Financial:

An increase in size leads to the fact that bigger businesses are less risky looking at financial compared to smaller businesses.

Banks are more likely to give a bigger company loans and it will be cheaper because the rates are lower when it is less risky for a bank.

That fact reduces the costs caused by an increase of size.

Is when a business making more money on there larger level of output.

You can be able to buy mass production machinery or specialised computer systems

This is mostly only possible with large organisations

Economies of scale are the cost advantage from business expansion. As some firms grow in size their unit costs begin to fall because of purchasing economies when large businesses often receive a discount because they are buying in bulk.

There are 6 factors contributing to EoS.

Managerial, Financial, Marketing, Risk Bearing, Purchasing and Technical.

Machinery which specializes in a certain work field will increase the production rate of a business, where as having only 1 machine which does most of the work will slow down production because of lack of time in between each Process stage of a Product.

Also machinery which focuses on 1 stage of the production will also increase the quality of the product.

Ex- Automatic Spraying Machines, Than a paint brush.

Having automatic Spraying machines on a production line will:

1- Speed up the process of painting.

2- Having a machine to do painting will make shore that an even amount of paint is used on the product, and plus having this machine will also reduce the amount of excess-waste.

internal economic: refers to the benefit the business can enjoy with in the company.eg private benefit while, external economic of scale refers to the benefit that the business can enjoy outside of the business private environment. Eg social benefit