Economies of scale mean that a firm can produce many units of a product at the cost lower than the one incurred by competitors. This concept is very imperative for an organization since it enables it to have the upper hand over other companies (Thomas & Maurice, 2010). To discuss this issue, the paper focuses on Apple Inc. being one of the top U.S. firms on the list by Forbes. The company is a manufacturer of personal computers, music players, phones and software and is well-known throughout the world. The paper will determine sources of economies of scale at Apple that are the foundation of its large size and success.
First, the Apple Company always tries to reduce its unit costs, and it has achieved this goal successfully. Although it does not rely on a quasi-fixed input as a source of economies of scale, the organization has large-scale production, which consequently leads to dividing the productive process into many single stages. That is, in the company, there is well-developed division of labor. It is very important for each corporation because it helps to simplify the manufacturing process (Thomas & Maurice, 2010). The proper division of labor accelerates the latter, improves co-operation of the staff, and eliminates unnecessary costs. It is a managerial source of economies of scale.
Apple also has a well-developed vertical management system. There is the division of rights and duties in each department (finance, distribution, and marketing) and branch in different areas of the world. It helps Apple facilitate and simplify work at the leadership level, accelerate cash flows, and move technology, labor and raw materials among branches without any problems. The management system represents the managerial force of economies of scale in Apple Inc.
The Apple Company has acquired Turi. It is a startup, which is engaged in the development of artificial intelligence. Apple uses the latter to reduce power consumption in its data centers. Even a slight decrease in the consumption of electricity allows the company to save millions of dollars. However, Apple can continue to refine the current system and save even more. In addition, with proper investments in the renewable energy, the company will not only be able to reduce its energy costs, but also decrease the negative impact on the environment. It is a technological source of economies of scale in the company.
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The company also offers a program of the redemption of old iPhones and iPads (for recovery and recycling). The recovery of old products involves dismantling devices and using valuable components for recycling and making new products. It extends the life of an item with the secondary market value. From this activity, the company also receives certain benefits and saves costs. It is another technological source of economies of scale in Apple.
In conclusion, the Apple Company uses some sources of economies of scale that are the foundation of its large size and successful work on the international market. The most effective is the technological factor of economies of scale because the success of any company depends on productive production. Moreover, only correct and rational organization of labor helps Apple to reduce the amount of production costs, as well as to speed up the exchange of information, technology and labor among branches. It also decreases the average cost of production and unit costs increasing production volumes. Dividing the manufacturing process into several single stages and developing the division of labor have a positive effect on the development of the company, its improvement and progress. Therefore, the proper division of labor is the key to success and long-term work on the market.
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