Sustainable Need for Economies of Scale

Breadcrumbs: The Future of Ubiquitous Computing --> The Driving Forces: Economical Forces --> Economies of scale

Description:

Economies of scale is a term that is used to describe the reduction in cost-per-unit as more units are produced. Nowadays, more and more companies try to utilize the advantages of other countries in the whole world to enlarge their business scale and as a result reduce the cost of their products and services. This trend accelerates the steps of "Global Village" because economics of scale requires the company to extend its sight into all over the world. The entire world but not only one single country is its factory that it could get resources and materials in one country, produce the products in another country and finally deliver the products to any other country.

More information: Economies of scale in Wikipedia

Enablers:

1. WTO and falling trade barriers
2. Decreasing transport costs
3. Investment incentives attracting investors to low-cost-labour countries
4. Advanced communication technologies - easier management of a transnational corporation
5. Growing demand for products
6. Competition pressuring lower prices

Inhibitorss:

1. Cultural differences/conflicts
2. Anti-globalization forces

Paradigms:

In such a business world full of intensive competition, every enterprise plans for achieving sustainable competitive advantage over, or reducing the edge of, its adversaries. In order to gain such advantage, a firm must provide comparable value to the customer but perform activities more efficiently than its rivals what means it must have cost leadership or at least its cost should be lower than most rivals. Utilizing economies of scale is an efficient way to achieve this goal thus finally gain stronger competition ability.

Experts:

WTO

Timing:

1914: Fordism - Henry Ford's combination of highly efficient factories, highly paid workers, and low prices revolutionized manufacturing

Web Resources:

Definition of Economies of scale