Edexcel IGCSE Business Studies 5.1.2 diseconomies of scale

Practise diseconomies of scale by defining rising average costs and explaining why larger businesses may become harder to manage.

Exam points

Define diseconomies of scale as average costs rising as the business grows.
Explain growth limits such as poor communication, coordination issues or lower control.

[Maximum number: 1]

Artify Studio was set up in 2015 by Tay Hui Jae in the busy Kampong Glam area of Singapore. Artify Studio's aim is to have 'a communal art space where people can come together and paint, where people would be given as much creative freedom as they would have if they were in their own spaces.'

Artify Studio provides many services including its popular Liberty Art Jam where customers can paint as well as listen to music. The studio offers a Corporate Art Jam and Regular Kids Classes. Customers can purchase art materials after attending the studio.

Artify Studio is a profit-making organisation with a social element. It employs seven part-time people, all of whom are art enthusiasts.

Define the term diseconomies of scale.

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5.1.2 Diseconomies of scale question 1