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Benefits of economies of scale.

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How do economies of scale benefit an organization?

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Solution Summary

This solution of 250 words introduces the basics of economies of scale, touching on internal and external economies of scale.

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Economies of Scale (Definition)

The primary benefit of economies of scale are that companies are able to grow profits and increase production while decreasing costs. In order for a company to gain a competitive edge two factors are critical which are product differentiation and cost leadership. Economies of scale is one driving aspect of successful cost leadership. Cost leadership occurs when a company is able to produce a product ...

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