Friday, 22 January 2016

Economies of Scale - term of the day. Should this mean - Profiteering vehicle for businesses?

TERM OF THE DAYJANUARY 21, 2016
economies of scalef   t
The reduction in long-run average and marginal costs arising from an increase in size of an operating unit (a factory or plant, for example).economics of scale can be internal to an organization (cost reduction due to technological and management factors) or external (cost reduction due to the effect of technology in an industry). See also diseconomies of scale.
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USAGE EXAMPLE
Big companies are often more profitable than smaller ones because ofeconomies of scale: suppliers may offer discounts for larger orders, shippers may decrease per trip costs to compete for a large volume of business, and necessary production management staff may increase internal manufacturing efficiency.

TERM OF THE DAYJANUARY 21, 2016
economies of scalef   t
The reduction in long-run average and marginal costs arising from an increase in size of an operating unit (a factory or plant, for example).economics of scale can be internal to an organization (cost reduction due to technological and management factors) or external (cost reduction due to the effect of technology in an industry). See also diseconomies of scale.
Read more

USAGE EXAMPLE
Big companies are often more profitable than smaller ones because of economies of scale: suppliers may offer discounts for larger orders, shippers may decrease per trip costs to compete for a large volume of business, and necessary production management staff may increase internal manufacturing efficiency.

The more I think about it - it seems businesses do not wish to talk about Economies of Scale. The Mobile Users have touched a Billion user mark in India but have the call rates or data rates been reduced?  No.  A friendly Government and an inert regulator ensures that !

Sure, Profit is not a Bad word but excessive profit is called Profiteering and this should be treated like Black Money generation and punished.

If not, Of course, the customers wake up - rather late. Start movements - even though under the false belief that they are the Kings :) and suffer.
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