Economies of Scale

Economies of Scale

Economies of scale is an economic term and refers to the fact that for large companies already involved in a certain business, it is very easy to produce related products and thus more money by cutting on costs. To explain the concept, in terms that not necessarily involve economics, imagine a person who has two jobs. For example, a young woman who works as a writer during the day, and as French tutoring at night. Further, imagine the topic of her writing is French literature, therefore, she would be already prepared for her evening session of tutoring without exerting any special or extra effort. Thus the already prepared her tutoring lesson simply by writing at her first job writing about French literature.

Of course the case is very small compared to huge international corporations. For example, the world known store Walmart has been known y annihilating the competition by simply being able to offering merchandise at much lower prices than other stores. However, with Walmart the case is that because they are such a large corporation, they are able to buy in very large quantities, much larger than smaller merchandisers.

Alligator or Crocodile? Image: Megan Jorgensen (Elena)

Management accountants are the ones who deal with merchandising industries, as well as manufactures. The difference between the two is that merchandisers are resellers, while manufacturers actually produce the products they (or merchandisers) sell. In Canada, the designation of general accountants and management accountants have merged under one umbrella terms CPA or Chartered Professional Accountant or CPA. Interestingly, a very sought after job in accounting is the title of Controller or even higher in the organizational hierarchy, Chief Financial Officer or CFO. 

Aside from the large salaries that these jobs bring about, they call for much prestige. But all is not easy in the financial and accounting world.many financiers and accounting professionals must work a lot of overtime and even often work as much as twelve hours per day, in certain cases. Is a difficult life versus work balance worth the money, the stats and the prestige. Everyone has their own answer.