gcse notes: Internal Economies of Scale

Purchasing – big firms that buy large amount of resources can get cheaper rates (bulk buying)
Marketing – these include advertising costs. Larger companies can use 1 advert to advertise over 1000 stores whereas another company can only advertise 1 store
Technical – larger plants are more efficient than smaller ones. There can be more specialisation and more investment in machinery
Financial – large firms can take loans from the banks at a lower interest rate as there is less risk for the money not coming back
Managerial – as firms expand they can afford specialist managers, increasing efficiency
Riskbearing – larger firms are more likely to have a wider product range and fall into a wide variety of markets. They can also afford to invest in research

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