Types of economies of scale And Aaron’s furniture

Managerial economies of scale Larger firms can afford to employ specialist managers and employees. They have a marketing director, a production director, and a production director. All these jobs will be done by specialists with skills, qualifications and experience, and will make the firm more effective and hopefully more successful

Technical economies of scale Saving on production costs by improving production methods and equipment. How do they do this? Biomass burner? Quality?

Purchasing economies of scale Discounts for buying in large quantities.

Risk bearing economies Although they are not very diverse (they only sell bedroom furniture) they plan to sell in different markets.

Marketing economies

Financial economies A larger firm may benefit from lower interests and more choices of funding. Aaron’s are finding their loan might be expensive!