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How economies of scale apply to Wal-Mart

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Determine and discuss whether economies of scale have relevance to such companies as Wal-Mart.

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Solution Summary

This solution explains how economies of scale give large firms like Wal-Mart a competitive advantage over small firms.

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They certainly do. Economies of scale refers to the cost advantages that big firms have over small firms. In some industries, large firms have lower average costs than small firms, allowing them to sell their products at lower prices and gain a competitive advantage over small firms.

To see how this applies to Wal-Mart, contrast one ten-department Wal-Mart superstore with ten small, independent ...

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