Passion is in feeling the quality of experience, not in trying to measure it when my wife, Zarina, a chartered accountant by profession and I decided to host the four birthdays of our family members in just one celebration in the month of October. It was dedicated for our son, Farouq & wife, Nadja and our 2 granddaughters, Iffah & Ilfi at The Ame Soeur Bukit Jalil. A modest celebration but full of laughters & keeping each other sane! A gathering of our immediate family to wish the 4 celebrants great happiness and joy that never end.
The theme of their birthdays was economies of scale. I remember economies of scale were the main drivers of corporate gigantism in the 20th century. They were fundamental to Henry Ford's revolutionary automobile assembly line, and they continue to be the spur to many mergers and acquisitions today. In my storytelling, I briefed those present there are 2 types of economies of scale: “Internal cost savings that accrue to a firm regardless of the industry & external benefit a firm because of the way in which its industry is organised.”
I explained that “Internal economies of scale arise in a number of ways . For example, it is easier for large firms to carry the overheads of sophisticated research and development (R&D). In the pharmaceuticals industry R&D is crucial. Yet the cost of discovering the next blockbuster drug is enormous and increasing. Evidently, several of the mergers between pharmaceuticals companies in recent years have been driven by the companies' desire to spread their R&D expenditure across a greater volume of sales.” (www.investopedia.com)
In fielding question from Nadja, a civil engineer by training, I responded that,"First cousins to economies of scale are economies of scope, factors that make it cheaper to produce a range of products together than to produce each one of them on its own. Such economies can come from businesses sharing centralised functions, such as finance and marketing."
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