Managerial Economies

Managerial Economies: When the size of the firm increases, the efficiency of the management usually increases because there can be greater specialization in managerial staff. In a large firm, experts can be appointed to look after the various sections or divisions of the business, such as purchasing, sales, production, financing, personnel, etc. But a small firm cannot provide full-time employment to these experts naturally, the various aspects of the business have to be looked after by few people only who may not necessarily be experts. Moreover, a large firm can afford to set up data processing and mechanized accounting, etc., whereas small firms cannot afford to do so.