Diseconomies of Scale

• What is meant by diseconomies of scale?


  Occurs when businesses grow too large that the costs per unit increase.
• What are the types of diseconomies of scale?


  • managerial DEOS
  • coordination and control problems DEOS
  • worker alienation DEOS
  • communication challenges DEOS
• What is meant by managerial diseconomies of scale?


  As firms become very large, the management structure can become overly complex and less efficient. Communication breakdowns and bureaucracy may increase, leading to higher costs.
• What is meant by co-ordination and control problems DEOS?


  Larger firms struggle to maintain effective control and co-ordination among various departments and divisions, leading to inefficiencies and higher costs.
• What is meant by worker alienation DEOS?


  In very large organisations, employees may feel disconnected from the company’s goals and values, which can result in lower productivity and higher turnover rates.
• What is meant by communication challenges DEOS?


  With an increase in size, communication becomes more challenging, leading to misunderstanding and errors that can increase costs.