Economies of Scale


You get economies of scale when the unit cost falls as the number of units made increases. There are three reasons for the lower unit costs:

  • Fixed costs are spread over a larger number of units;
  • You can use more efficient processes, perhaps including more automation;
  • More experience with the product raises efficiency.

Economies of scale encourage you to concentrate operations and make as many units as possible in the same facilities. Another benefit from larger operations comes from the ‘learning curve.’ The more often you repeat something, the easier it becomes.

Obviously, you can’t expand facilities for ever, and there is no point in having more capacity than likely demand. More realistically, if you expand beyond a certain size the organization gets too complex – making communications, support functions and management more difficult. Beyond this point you get dis-economies of scale. You can see these in many large organizations, such as governments, which aim for the efficiencies that come from centralization, but actually get bogged down in bureaucracy and red tape.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Handling Failure Factors


Herebelow are some useful techniques for handling failure factors while building your business:

1) Square peg, round hole: the most important thing to remember is, don’t try to make something fit if it doesn’t. You may have a high level of expertise in the traditional paradigm, and many of those skills will serve you well in marketing. But be aware that others won’t. When you find a skill or technique just isn’t working in the new paradigm, don’t blame marketing—discard the technique. Also, be open to learning new ideas and skills that were designed with marketing in mind.

2) Don’t re-invent the wheel: After decades, the patterns for successful behavior in marketing are fairly established. It’s human nature to want to add our own flair to everything, but make sure you learn the basics first. Some people in past decades tried some ideas but they didn’t turn to be effective as they hoped. Don’t re-invent the wheel.

3) Work the plan, not the angles: Perhaps the most important general rule for avoiding unexpected failure factors is to focus on the simple business building system and stay away from sidelines and ‘new’ angles. You came to marketing to build a business, not to get bogged down in side ventures and alternative schemes. Indeed, it’s tempting to look for alternative ‘revenue streams,’ but the time you spend chasing these things would be much better spent invested in your core business. Once you’ve made a commitment to building a marketing business, that commitment should be total. Any side activity has the potential to draw away your focus—and your growing business can suffer.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please contact www.asifjmir.com, Line of Sight