inernal economies scale

• Labour


  External Economies
• Concentration of firms in one area

  • Encourages a build up of skilled labour force
  • Leads to the build up of a labour force equipped with the skills required by the industry
  • Training costs may be reduced if workers have gained skills at another firm in the same industry
  • Local schools and colleges, or even local government, may offer training courses which are aimed at the needs of the local industry
• Cooperation


  • Firms in the same industry are more likely to cooperate if they are concentrated in the same region
  • They might join forces to fund a research and development centre for the industry
  • An industry journal might be published, so that information can be shared
• Disintegration


  • Production is broken up so that more specialisation can take place
  • Firms might specialise in the production of 1 component and then transport it to the main assembly car plant
  • In the West Midlands a few large car assembly plants exist, while there are many supporting firms
• Ancillary and Commercial Services


  • An established industry, particularly if it is growing, tends to attract smaller firms trying to serve its needs
  • A wide range of commercial and support services can be offered
  • Specialist banking, insurance, marketing, waste disposal, maintenance, cleaning, components and distribution services are just some examples