Anything which helps the large-scale production to lower the production cost is called as the economies of scale. I have discussed that in my previous article. If you want to read about that then you can follow the link which is provided here.
If you want information about the diseconomies of scale then let me you that you have been landed on the right website. Because in this article of mine, I will be telling you the meaning of the diseconomies of scale.
What is Meaning of Diseconomies of Scale?
So without wasting much of your time let us check out the meaning of the diseconomies of scale. In most of the cases, the economies of the scale cannot be utilized properly and they turn into diseconomies as the scale of output increases. I have discussed some of the diseconomies of scale in the further part of this article.
1) Diseconomies of Management.
As an when the size of the organization increases the management becomes more difficult. For example, in big organizations, decision-making process takes longer time. And the problem of coordination and cooperation between the employees increase.
There is the possibility of the decrease in the molarity as everyone starts feeling unimportant with the growth of the organization.
2) Labour Relations.
There are proofs to show that labor relations become strained with the increase in the size of the organization. Employer and employees relation becomes more impersonal. Obviously, it may result in a decrease in productivity.
3) Diseconomies of Marketing.
After a particular point, the selling and sales promotion becomes more difficult. More money has to be spent on advertising and sales promotion. As a result, they need to spend more to sell their product. This one will be considered as a diseconomy of scale.
4) Technical Problems.
Technical problems increase when the size of the organization increases. For example, if the organization gets new machinery and the workers are aware of only the outdated technology.
At that time the company needs to arrange a special building where the machinery can be kept and has to provide training to the worker. For that, the company needs to spend money and hence this is considered as diseconomies of scale.
- Roles and Responsibilities of Managerial Economist.
- Functions of Managerial Economist.
- And Who is Managerial Economist?
So this was all about what are diseconomies of scale. I hope you are clear with all the information mentioned in this guide. But if you have any kind of doubts in your mind then you can comment down below.