Sample Essay
The financial economies of scale occur when large organizations are able to ascertain special treatment and financing for their operations. All firms are interviewed and assessed by the credit companies and banks when they inquire about funding loans. However the larger firms get preferential treatment as they have a much better reputation and they are able to take out lions against their much larger assets.
Moreover the larger firms are usually offered lower rates of interest on their credit loans while the smaller firms are offered much larger rates of interest due to the increased risk of default and nonpayment of the principle. Aside from this the ultimate advantage available to large firms is that of the stock exchange. Large public organizations are able to option off their stock on the stock exchange in order to raise funds for the organization. The larger firms are also not liable for paying high rates of interest on the new company bonds.
The networked economies of scale pertain to the large firms being able to use network technology and take advantage of increased communication. The network economy actually comprises of online entities like online auctions, air transport networks. The large firms are able to add on to their network and communicative technology at almost zero costs while the benefits achieved from the investment and implementation of such technologies results in comparatively substantial benefits. Even each new user to the network is added at minimal costs while the benefits reaped from the additional are considerable and contribute towards the productivity of the organization.
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