There are several Economies of scale. Firstly in external economies of scale you can find skilled Labour which means that if and industry is concentrated in a particular area, There is likely to be a buildup of labour which has the skills and work Experience required by that industry. As a result training costs will be lower When workers are recruited from this pool. It is also likely that local schools And colleges will provide vocational courses which are geared to the local Industry. Additionally in Internal Economies of Scale we can find marketing Economies which means that for example, a very large company may find it cost Effective to operate its own fleet of delivery vehicles. For a large company, With lots of deliveries to make, this would be cheaper than paying a Distributor.
The most Significant advantage of achieving economies of scale is a reduced cost per Unit of production.Most other advantages stem from this primary Benefit. A lower cost per unit allows a business to earn greater profit even When maintaining a similar price point. The company could pass on cost savings To customers by operating with a low-price strategy. However economies of scale Have also disadvantages for the consumers like for exampleStandardization of productions; this is where Mass production of products may limittheamount of effective customer choice in the market. Furthermore another disadvantage we Can find is the developing of monopoly power which means that businesses May use economies of scale to build up monopoly power in their own industry and This might lead to a reduction in consumer welfare and higher prices in the Long run
It can be argued that mergers between firms producing Similar goods and services always benefit consumers taking in count that when Two firms merge several things happen like for example the reduction of their Costs which can be passed on to consumers through lower prices. Additionally Mergers have other advantages for the consumers as improving the product Quality. This happens when a merger of two set up companies decides to increase Their size, this leads them to benefit from economies of scale which will make Them produce better quality products in less time. However mergers between firms not always Benefit consumers as they have less variety and choice. Moreover by increasing The size of a firm and taking away competitor mergers may decide to increase Their prices. In conclusion mergers between firms producing similar goods and Services benefit consumers most of the time as the prices normally go down due To the increase of the company´s size and cost savings.