Organisations gain many different operational benefits from producing goods or providing services on a large scale. As they get larger, often through the integration of business units under a single umbrella company, average unit costs fall and they benefit from economies of scale. Organisations must, however, aim for an optimum size of production, i.e. the size which suits them best. If the optimum size of an organisation is exceeded, the business becomes difficult to manage and inefficiencies, known as diseconomies of scale, occur. The competitive…

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