Question

how does economy of scales influence global competition?

Answer 1

Globalization–the integration of manufacturing variables and the inclusion of customer organizations from distinct industries around the globe–promotes unprecedented accomplishments of economies of scale for manufacturers. Access to enhanced numbers of workers, investors, markets, resources, techniques and business models through globalization can theoretically maximize productive efficiency at a rate consistent with the size of the world's population.

The economies of scale do not only benefit the organisation. Consumers can benefit from reduced prices. The economy is growing as reduced prices boost enhanced demand. Scaling economies offer big companies a competitive advantage over smaller ones. The bigger the company, non-profit, or government, the reduced the cost per unit.

Another significant reason that international trade may take place is the presence of economies of scale (also called increased yields to scale) in manufacturing. Scaling economies mean that production on a bigger scale (more output) can be accomplished at a reduced price (i.e. savings or savings). When manufacturing within an sector has this trait, specialization and trade can lead to changes in the world's productive efficiency and welfare benefits that will accrue to all trading nations.