23 Identify and explain two diseconomies of scale that NBV might experience. [6]

[BASEL Moderator]

NBV is a multinational company. It makes building products such as bricks. Last year NBV’s financial accounts showed capital employed as $144 billion. NBV has operations in 18 countries and a total 4 workforce of 400000. NBV experiences some diseconomies of scale. All raw materials are purchased from the countries it operates in to avoid problems with exchange rates. NBV plans to open a factory in Country B for the first time.

23 Identify and explain two diseconomies of scale that NBV might experience. [6]

Possible KN Points:
• Low morale/motivation/lack of commitment
• poor communication
• lack of/weak co-ordination/control