Economies of scale
Economies of scale are the cost advantages that companies, as Tantum, obtain due to size, output or scale of operations, with cost per unit of output usually decreasing with increasing scale as fixed costs are spread over more units of output. So as a quantity production increases, the average cost of each unit decreases.
This simply means that economies of scale help to do things more efficiently by increasing the size or the speed of diverse operations.
Tantum, by going global, increases and improves its economies of scale as many of our clients are already globally expanded. We will offer them our services not only in Italy but in Asia as well. Our objective is to attract new clients thanks to this process by selling our services in larger volumes; remembering that larger quantities doesn’t mean lower quality.
Diseconomies of scale
Diseconomies of scale are those factors that increase unit cost as a firm’s scale of operation increases beyond a certain size. These are caused by management problems of trying to control a company with many employees, or by communication problems, or by poor coordination or by slow-decision making.
However, Tantum decided to adopt strategies to prevent this to happen.
Having two business global sites may cause management problems: to avoid them, we organized a three-days stage to inform all our employees about the new structure of the company, clearly stating who are the new responsibles about a certain geographic or services area, so that everyone knows who to report to. This will help also to improve the coordination of the company, so that every process is faster and neater.
Technology helps us to obviate the communication problems: conference calls, and meetings with telepresence will be a strong reality among our internal process of decision making. However, we want to make clear to our employees that for important meetings we will rather organize real meetings, because we believe in the power of real contact and interaction.
(Business Management textbook, page 89; https://en.wikipedia.org/wiki/Economies_of_scale, http://www.investopedia.com/terms/d/diseconomiesofscale.asp)