19 Identify and explain two diseconomies of scale that Ramford might be experiencing. [4]

[BASEL Moderator]

Ramford is a private limited company. It has four factories which make a wide range of food products including breakfast cereal and ice cream. The Finance Director is worried about the company’s financial performance. She has read that many businesses failed in the last year. ‘I think we are suffering from diseconomies of scale’ she said. Ramford’s directors have decided to cut the number of different products it makes from 80 to 10.

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19 Identify and explain two diseconomies of scale that Ramford might be experiencing. [4]

Possible KN Points:
• Poor communication
• Low morale/motivation
• Slow decision making
• Lack of control