External economies of scale

• External economies of scale occur outside a business and benefit the whole industry resulting in lower average costs
• Financial services:

  • As an industry grows, financial services can improve.
  • They may produce services that can benefit certain industries- insurance deals my be available to help a business reduce risk
• Education Economies: Local colleges will set up training schemes suited to the largest employers' needs, giving am available pool of skilled labour leading to more efficient workers being employed
• Supplier economies: A network of suppliers may be attracted to an area where a particular industry is growing leading to more competitive prices for suppliers
• Infrastructure economies: Infrastructure such as new roads and other transport links, and communication improvements can benefit all businesses in an area. This helps gain customers and reduce the cost of transport/delivery