Economicof Scale

The Economies of Scale refers to the phenomena of decreased per unit cost as the number of units of production increase. It’s have two type of Economies of Scale, that is Internal Economies of Scale and External Economies of Scale. Under Internal Economies Of Scale are made within a firm as a result of mass production. As the firm produces more and more goods, the average cost begin to fall because of Technical economies, Managerial economies, Financial economies, Marketing economies and Commercial economies and Research and Development.

Under External Economies of Scale are made outside the firm as a result of its location, and occur when a local skilled labour force is available, Specialist, and local back-up firms can supply parts or services, An area has a good transportation network and an area has excellent reputation for producing a particular good.

In Nestle company there use Internal Economies of Scale in producing their products. The first is Technical Economies. For example, Nestle company using automatic ice cream paper cone machine. This machine is used to form the sleeves of ice-cream cones and cones with similar shapes. Processible materials include printed and die cutter blanks of aluminum foiled paper, PE coated paper and dry stencil paper. Next, Marketing Economies. For example, Nestle Company advertising on television and in national newspapers their products, across a large level of output.

Besides that, Nestle Company also use External Economies of Scale in their good transportation network. For example, Nestle main have shift long distance transportation from the road to either rail or short-sea shipping, both of which result in significantly lower GHG emissions. Much of our short to medium distance transportation continues to be by road, and as such we ensure that the following mitigation measures are adhered to: optimizing truck efficiency (new engines, aerodynamic devices and eco-driving training); increasing