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What is Economics of Scale

Chapter 75
Encyclopedia of Information Science and Technology, Fourth Edition
Economies of scale is the cost advantage that arises with increased output of a product. Economies of scale arise because of the inverse relationship between the quantity produced and per-unit fixed costs; i.e. the greater the quantity of a good produced, the lower the per-unit fixed cost because these costs are spread out over a larger number of goods. Economies of scale may also reduce variable costs per unit because of operational efficiencies and synergies. Economies of scale can be classified into two main types: Internal – arising from within the company; and External – arising from extraneous factors such as industry size.
Published in Chapter:
IT Strategy Follows Digitalization
Thomas Ochs (Villeroy & Boch, Germany) and Ute Anna Riemann (SAP SE, Germany)
Copyright: © 2018 |Pages: 15
DOI: 10.4018/978-1-5225-2255-3.ch075
Full Text Chapter Download: US $37.50 Add to Cart
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Chapter 36
IT Strategy Follows Digitalization
Economies of scale is the cost advantage that arises with increased output of a product. Economies of scale arise because of the inverse relationship between the quantity produced and per-unit fixed costs; i.e. the greater the quantity of a good produced, the lower the per-unit fixed cost because these costs are spread out over a larger number of goods. Economies of scale may also reduce variable costs per unit because of operational efficiencies and synergies. Economies of scale can be classified into two main types: Internal – arising from within the company; and External – arising from extraneous factors such as industry size.
Published in Chapter: IT Strategy Follows Digitalization; From: Advanced Methodologies and Technologies in Business Operations and Management
Full Text Chapter Download: US $37.50 Add to Cart
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