1. Reflection Question…
‘How can Asda afford to sell products cheaper than the local Londis shop?’

2. TOPIC: Topic 1: Business Organization and Environment
LESSON TITLE: Economies & Dis-economies of Scale
COMPETENCY FOCUS:
Entrepreneurship (S4): To develop your entrepreneurial skills in preparing a realistic proposal for a new business start-up. You will understand the process a business will have to go through when starting up, including the underlying principles of starting a business.  
[IB Learner Profile Development: Open-minded]
Learning Objectives
By the end of the lesson, you should be able to…
LO1) Distinguish between economies and diseconomies of scale
LO2) Apply the concepts of economies and diseconomies of scale to business decisions
LO3) Evaluate to what extent economies and diseconomies of scale may increase the profitability of a business.
SMSC: You will assess the organisational culture of businesses in terms of fundamental structure, purpose and strategy development.
CRITICAL THINKING KEY:
Knowledge Application Analysis Evaluation

3. Scale of Operations
There is a huge difference between the scale of operations of a small business and the largest companies in the world. Scale of operation: the maximum output that can be achieved using the available inputs (resources)

4. Economies of Scale
Lowering the cost of producing each product (unit cost) through increasing the level of production.
Cost benefits of this are:
Purchasing economies
Technical economies
Financial economies
Marketing economies
Managerial economies

5. Diseconomies of Scale
Factors that cause the average costs of production to increase, when the scale of operation is increased. If there were only advantages for operating on a large scale then everyone would do it! There are many management problems in trying to control thousands of workers, operations, divisions etc…these are… -Communication problems -Alienation of the workforce -Poor coordination and slow decision-making

7. Small Vs Large Organisations

8. Small Vs Large Organisations - Advantages

9. Small Vs Large Organisations - Disadvantages

10. Exam Practice: Activity 7.1 Pg.69

11. Reflection
Reflect on what you have learnt this lesson. What do you need to know more about?