All business firm's main aim is to maximize the profit at minimizing the cost. In this context firm produces on a large-scale, they derive certain economies, which help in lowering the costs of production and increasing their production efficiency. Economies of scale are an organization that can expand any size of its operations. “ Economies of scale gives big companies access to a larger market by allowing them to operate with greater geographical reach. ” (Economies of Scale, 2007). Eg. Long term contracts and bulk purchase is helping to reduce the cost of products.
In production function long-run production function is more profitable it reduces the unit cost per production. Economies of scale are mainly classified into two Internal economies, External economies. Internal Economies; It is internal to a firm when production costs are reduced as a result of the expansion of output. Internal economies differ from one firm to another. Marks & Spencer economies of scale in the area of their long term contract with UK manufacturers help them to provide the products at a lower price and achieve a good market. Marks & Spencer’ s big volume-based sales and good management system is a good example of their internal economies.
Marks & Spencer's strategy in business is mainly they are branding and distributing their products and market it through their retile outlets. Integration: Integration in economics is dealing with all activities of an organization integrates and manage these activities. Marks & Spencer’ s integration is the coordination of their activities. Economic integration is a term describes how deferent economies integrated. Global economic integration creates a lot of opportunities in business. This integrated environment helps the business to grow globally.
The meaning of integration is the integration of global economies through trade, technology, and factor movement. The growth of economic integration highly depends on two factors. Firstly the growth of technology and communication, growth of Transportation. Changes in technological and transportation help to simplify business activity’ s in deferent countries.
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