Key Benefits of Economies of Scale
The key benefits from economies of scale are:
Production efficiency
When businesses operate on a large scale, overall efficiency generally increases. They can fine-tune each process manually to enhance efficiency and reliability.
Cheaper raw material
Businesses enjoy discounted rates on raw materials as they make bulk purchases. These lower acquisitions of raw materials help businesses to increase their operational efficiencies and save costs over time.
Promotion and marketing costs
The marketing and promotion cost decreases when economies of scale are implemented.
Lower interest rate
Businesses can acquire cheaper capital when operating at scale. Banks offer a lower rate of interest on loans and facilitate capital readily when the loan amount is large.