Economies of scale
Economies of scale refers to the principle that larger operations can provide products or services at lower cost per unit. They have larger plants that are more productive, can invest in more efficient equipment, can buy in larger quantities for better pricing and lower shipping costs, etc.
In business, economies of scale is one of the advantages of higher market share. A leader can have lower cost and can more easily defend market share. Competitors cannot duplicate the advantage because their plants cannot be as large without gaining market share.
Recent Mentions on Fool.com
- 3 Reasons Hospira, Inc. Stock Could Fall
- 5 Things Advanced Micro Devices, Inc.?s Management Wants You to Know
- Sears Earnings: A Textbook Example of a Company in Freefall
- 4 Things Time Warner Cable's Management Wants You to Know
- Is This the Real Reason Lorillard Is Willing to Sell blu eCigs?
- 5 Things Buffalo Wild Wings Management Wants You to Know