"**There are four main economies of scale**, across the value chain: "**Purchasing economies** – the larger the producer, the more likely they will be able to drive a harder bargain with suppliers, such as steel producers, and enjoy volume discounts. "**Technical economies** – the machinery needed to produce 20,000 widgets a day is unlikely to be 20 times as expensive as that needed to produce 1000 a day. "**Efficiency economies** – the process for producing 20,000 widgets a day is likely to be more highly automated, from handling inputs through manufacturing to handling outputs, and with more advanced or streamlined business processes, for example in R&D, than for the smaller plant. "**Indivisibility economies** – some items are beyond the reach of the smaller producer to buy, whether state-of-the-art equipment or a national television advertisement. ([Location 2027](https://readwise.io/to_kindle?action=open&asin=B00BU0NELQ&location=2027)) --- **Tags** -- [[quotes]], [[efficiencies]], [[economies-of-scale]], **Source** -- [[20250317012611 - B - Key Strategy Tools]]