Diseconomies of scale
Diseconomies of scale occur when a firm's long-run average cost (LRAC) increases as output increases beyond minimum efficient scale. These are cost disadvantages arising from difficulties in managing very large firms.
Real World
When HSBC grew to employ over 200,000 staff across 64 countries, communication breakdowns between divisions contributed to a $1.9 billion money-laundering compliance failure in 2012.
Exam Focus
Link diseconomies to specific managerial problems like poor communication — vague answers score poorly.
How well did you know this?