Eve 998 Questions 5 Answers 1 Best Answer 60 Points View Profile Eve Asked: October 14, 20202020-10-14T18:47:09+05:30 2020-10-14T18:47:09+05:30In: Business What is the difference between Internal and External Economies of Scale? Hi, What are the differences between Internal and External Economies of Scale? Internal vs External Economies of Scale?? Differences Share Facebook Related Questions What is the difference between Free Trade and Fair Trade? What is the difference between Packing and Packaging? 1 Answer Voted Recent CrazyMan 17 Questions 1k Answers 1k Best Answers 43k Points View Profile Best Answer CrazyMan Guru 2020-10-14T18:48:52+05:30Added an answer on October 14, 2020 at 6:48 pm Difference Between Internal and External Economies of Scale Economies of scale are the money-saving benefits the companies get due to an increase in production. Because of increased production, the cost-per-unit decreases while the manufacturing output increases. Economies of scale are also dependent on the business size, as large businesses often have greater cost-benefits as compared to small businesses and enterprises. The internal economies of scale can be defined as the benefits that occur due to the growth of specific firms with which they are associated, while external economies of scale are the benefits that occur because of numerous firms in the industry. Let us understand both the terms in a more precise way. The internal economies of scale estimate the company’s productivity and efficiency by increasing the output when the average costs of the product fall. This is the most common feature of the large companies, and the internal economies of scale can be further classified into six types: Technical economies of scale Managerial economies of scale Marketing economies of scale Financial economies of scale Commercial economies of scale, and Network economies of scale The external economies of scale are achieved partly by the company and partly by the economic growth and development in the particular industry. External economies of scale affect the whole industry, where average costs diminish and the entire industry flourish. The external economies of scale can be further classified into four types: Infrastructure economies of scale Specialization economies of scale Innovation economies of scale Lobbying economies of scale Difference Between Internal and External Economies of Scale Internal economies of scale depend on the organization’s internal economies and result into increased output. In contrast, external economies of scale depend on the external factor of the economies because of growing organizations in similar industries. Internal economies of scale help companies compete with the international market because of reduced costs, while external economies help companies not be exposed to threats outside the business. Internal economies of scale are based on the small changes made within the organizations, while external economies of scale are based on the large changes outside the organizations. The economies of scale provide the companies’ cost-benefits when the enterprise grows and manufacturing units increase. 2 Share Share Share on Facebook Share on Twitter Share on WhatsApp Share on LinkedIn You must login to add an answer.Continue with FacebookContinue with GoogleContinue with Twitteror use Username or email* Password* Captcha* Remember Me! Forgot Password?