Economy Scale Impact on the Enterprise Competitive Advantages

Abstract

An enterprise striving towards bigger profit first of all must correspondingly manage internal conditions forming and effectively use them, so that it could reduce production costs and achieve bigger economy on which the enterprise competitiveness depends. This task is solved through corresponding enterprise management strategies which enable the enterprise to choose and employ factors forming the enterprise competitive advantages in competing with other enterprises. The enterprise which has presented the produced product to the market cannot change these results especially in a short period. Enterprise can manage factors of competitive advantages directly during the production process. Such management of factors of competitive advantages at an enterprise is understood as the reduction of production costs applying corresponding strategies of economy scale. An enterprise is interested in producing more products, so bigger capital and labor resources are necessary to increase the scale of production. The quantity of produced production which is determined by material, labor and financial resources and the effectiveness of their employment are called scale of production. When economy is increasing in decreasing production costs, growing economies emerge, which forms a respective economy scale manifesting itself in different types of economies of scale, economies of product’s scope, economies of innovation and economies of experience and knowledge, taking into consideration the specificity of measures used for the increase of production scale. The factors which influent of economy scale in corresponding scale of production limits are the factors reducing production costs and formatting competitive advantages at the same time. Economy scale which forms enterprise competitive advantages do not become the factor reducing or increasing enterprise competitive advantages by themselves. The corresponding strategies increasing enterprise competitive advantages are essential. Economy scale strategies can be accepted and changed before the end of the good production and selling process.