Diseconomies of scale occur when a business experiences a decrease in efficiency and an increase in costs as it expands. This can happen for a variety of reasons, including:
- Increased bureaucracy and management challenges
- Decreased communication and coordination
- Difficulty in attracting and retaining qualified employees
- Increased costs of raw materials and other inputs
- Decreased flexibility and adaptability
There are a number of steps that businesses can take to avoid or mitigate diseconomies of scale. These include:
