The Farm of Many Faces
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2. What are the challenges of managing and growing economies of scale and economies of scope operations?Economies of scale happen at whenever a firms average costs of production decrease(cost per unit) for single product type whereas economies of scope reduction of average cost by producing more types of products.But firms can face many challenges while growing managing and growing economies of scale and economies of scope operationsThe fist challenges it can be managerial inefficiency. It can be occur when a firm expands beyond a their optimum limits,it face with difficulty manage efficiently to coordinate the process of production. For example;polyface firm found ways to effectively use the resources inhererent in the land. Their grazing system use theirs resources and product which,beef,chicken,egss effectively.But if the polyface grown quickly and reckless it will face with difficulty to manage and co co-ordinate the process of production. These lead to adversely effect of operational efficiency. This low efficiency and non-coordination result in an increase in unit cost all types of product.Another challenges it can be labor inefficiency. To produce more product to decrease unit price Overcrowding of labor may result of to loss of labour productivity.For example a firm can decrease the unit of cost of product by adding the new machine and labor. But when these labor increase it lead to communication problem between them so it harder to produce the same level of output per hour which decrease the productivity of firm. Moreover, in the case of scope economies it is hard to exploiting synergies (possible effects of collaboration)between similar value chain. For example Workers will not be able to specialize in a product because they are working on more products, and therefore the productivity per product will be reduced these can cause inefficiency in the workforce.
Furthermore, especially agriculture and extractive industries natural challenges huge effect on economies scale and scope growth. For example excessive use of cultivable land cause exhaust of mineral of land. İf the growth will continue , After a period of land degradation comes to the irreversible point then farm no longer be cultivable Producing more types of product cause the more exhausting of land so these issue critical for land-bound companies like polyfaceFinally,logistic can be challenges of managing and growing economics of scales ansd scope operation.As the output increase, the logistical cost of transporting goods removed markets can increment sufficient to balanced any economies of scale. For example, when a firm produce more product to meet the demand in remote regions, the more it needs to ship the product to distant locations, these can increase the unit price per product.Moreover As the variety of products increases, their packaging and transport conditions will change and if this variety is not kept at the optimum level, the product variety will cause more harm to the firm than the benefit.