Economies of scale

OK, so I remembered the term economies of scale, and similarly diseconomies of scale, but the exact meaning and how it was relevant to my blogging mission was not completely clear. So step one is to remind myself of the exact meaning - what does economies of scale mean? According to investopedia.com economies of scale are achieved when 'more units of a good or a service can be produced on a larger scale, yet with (on average) less input costs'. So it makes sense that where a company (such as a TNC) has a monopoly and he ability to achieve economies of scale, there will be a negative impact upon local businesses. My mind started to wander a little and a small case study a little closer to home came together in my head. There is a little company in the UK (and now also to be found overseas) called Tesco. In recent years there has been an explosion in the number of Tesco stores in the UK, in particular Tesco Express. The arrival of these stores on what seems like every street corner has been at the expense of the traditional corner shop. And the reason? Economies of scale. Tesco can afford to produce goods at a lower cost than their competitors. However, this comes at the expense of more than the local corner shops. Farmers are suffering and are being put at the brink of bankcruptcy (http://www.foe.co.uk/resource/briefings/the_tesco_takeover.pdf) as costs are being lowered and lowered. The other negative impact of this process is upon the environment, as foods are flown from across the world to satisfy the demands of the buying public, increasing it's 'carbon footprint'. As well as this, TNCs such as Tesco are having an impact upon other businesses further afield as they are trying to expand the products that they offer. It has been well documented how high street chains such as HMV, Waterstones and WH Smiths are struggling in the face of competition from supermarkets and online retailers, those companies that are benefitting from economies of scale.

So while previously I have seen the benefits that globalisation can bring, the negative impacts are rather aparent, with TNCs operating with 'unfair and unethical trading practices, leav[ing] a trail of environmental and social mayhem' (http://www.foe.co.uk/resource/briefings/the_tesco_takeover.pdf)