MANAGERIAL ECONOMIES occur because as a firm grows in scale it CAN HIRE SPECIALISTS which IMPROVES EFFICIENCY which in turn IMPROVES PRODUCTIVITY which will LOWER AVERAGE COSTS. 

Do you think it would be efficient for me to teach business in the French/German stream? ;)

MARKETING ECONOMIES occur because the cost of placing an advert in the newspaper, on TV, online etc... remains the same regardless of the amount of units sold, hence the AVERAGE MARKETING COST FALLS as scale increases.

• • • • LOW COLLATERAL = HIGH RISK = HIGH INTEREST RATES

      • HIGH COLLATERAL = LOW RISK = LOW INTEREST RATES

As a firm grows, its CHAINS OF COMMAND, SPANS OF CONTROL and in the case of cross-border growth, the THE LANGUAGE REQUIREMENTS are also likely to grow, therefore there is GREATER POTENTIAL for MISCOMMUNICATIONS, DISAGREEMENTS, and SLOWER DECISION-MAKING to occur. All of which can result in HIGHER AVERAGE COSTS.

As a firm grows its output level will grow and it will likely become a MASS-PRODUCER, which as discussed above often DEMOTIVATES WORKERS due to the MUNDANE-NATURE of their tasks. This LOSS OF PASSION and FEELING OF ALIENATION may REDUCE PRODUCTIVITY and lead to a RISE IN AVERAGE COSTS.

This clustering of firms ATTRACTS A NETWORK OF INTERMEDIATE GOODS SUPPLIERS and SUPPORT SERVICES, for example SUPPLIERS of RAW MATERIALS and MAINTENANCE SERVICES, and this will LEAD TO LOWER DELIVERY COSTS.

As an industry grows it can lead to cost increases for the businesses operating in the industry as there will be INCREASED DEMAND FOR LAND, PROPERTY and even AVAILABLE QUALIFIED LABOUR in that region, which FORCES FACTOR PRICES TO RISE and thus AVERAFE COSTS WILL RISE.

With reference to TJ, explain one economy of scale and one diseconomy of scale. [4]

Given the factors listed above explain why Mr. Bounous' would decide to keep his BOUNOMICS TUTORING SERVICE small.

Given the factors listed above explain why Mr. Bounous' would decide to grow his BOUNOMICS TUTORING SERVICE.

Using the examples above as a guide, create your own slideshow to illustrate an example of each type of merger.

Using the example above as a guide, create your own slide to illustrate an example of when a merger failed.

A JOINT VENTURE  involves the creation of a NEW, INDEPENDENT ENTITY by TWO OR MORE FIRMS AGREE TO WORK TOGETHER TO ACCOMPLISH A SPECIFIC TASK, that acts independently from the parent companies.

Each parent company owns a specific share of the new entity, and they share control and decision-making power based on their ownership percentages.

A STRATEGIC ALLIANCE does not create a new legal entity. It is a cooperative arrangement where each company remains independent.

There is no shared ownership in a strategic alliance. The companies involved collaborate while retaining their independence and decision-making power over their own operations.

Examples: Examples include collaborations in technology sharing, co-branding arrangements, or joint research projects (e.g., Starbucks and PepsiCo for ready-to-drink beverages).

Using the examples above as a guide, create your own slides to illustrate the features of a joint venture and a strategic alliance.

Using the examples above as a guide, create your own slides to illustrate the pros and cons of being both a franchisor and a franchisee.