Mental Model
Advantages of Scale, Economies of Scale
Summary
Advantages of Scale refers to the idea that as an organization performs more and more of the same type of work it will tend to acquire efficiencies over time.
There are a wide range of efficiencies that can be gained as the organization grows, from workers becoming better at their craft to the ability to order materials in bulk.
The key idea is that as an organization becomes more efficient at a task it often gains a Competitive Advantage as a result. [Read more…]