Distinguish between economies and diseconomies of scale, giving examples of EACH

Scale means to expand. When we talk about economies of scale, we refer to the
benefits that a firm receives as it grows. Diseconomies of scale is the opposite €“ it refers to
the disadvantages of scaling.

Take the example of a big company like Nike. It
is a recognized brand that makes billions in global sales every year. If Nike wants to expand to
a new market, but they dont have the capital, they can simply go to the bank and ask for a loan.
Since the brand is big and makes huge sales every year, the bank will approve the loan within a
short period. The lender can also give Nike credit at a cheaper rate because they want them to
return. The discounted bank loan is an example of economies of scale. Nike pays a lower interest
rate on the loan because of its size. The bank believes that such a company is unlikely to
default.

Scaling can also be bad for a company. Take the example of a
company like AT&T. It is currently the largest telecommunications company in the world. The
firm grew...

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