Business Scale

Business Scale

Business Scale Jonathan Poland

Business scale refers to the impact that a company’s size has on its competitive advantage. A scalable business is one that becomes more competitive as it grows larger, while a non-scalable business may face disadvantages as it expands. Scale is an important factor to consider when planning a business, developing strategy, and evaluating the competition. A company’s scale can affect its ability to compete in the market, as well as its potential for growth and profitability. The following are the common types of business scale.

Unit Cost
A company that is scalable experiences declining unit costs as it grows. For example, producing one million bicycles is typically cheaper per unit than producing one thousand. As such, it is often impossible for small firms to directly compete on price with larger producers. Smaller companies may avoid direct price competition by producing a niche product that the larger producer doesn’t offer.

In some cases, the value of a product or service grows as sales increase. A nightclub that is filled with people may be more valuable to customers than a nightclub that is empty. It is easier to find support and complementary products for a popular product as opposed to an obscure one.

A scalable business can drive down the costs of providing a service as it grows. For example, a large cloud infrastructure company can build more efficient data centers and push suppliers for cheaper prices due to its scale.

Brand Awareness
Customers are more likely to purchase a product that they know. Beyond that, customers are more likely to purchase a product simply because its brand name sounds familiar. This allows your sales to increase as your brand gains recognition and awareness in the market. Brand awareness is often one of the benefits of achieving scale.

Operational costs typically decline as a percentage of revenue as you grow. In some cases, large firms have operational issues due to factors such as legacy systems, excessively complicated processes and resistance to change.

Innovation can be difficult to maintain as you scale. There is something about large companies that seems to inhibit creativity, risk taking and divergent thinking.

Organizational Culture
Large firms are more likely to have negative office politics that interfere with productivity, innovation and strategy implementation.

Learn More
Rental Lease 101 Jonathan Poland

Rental Lease 101

In general, a rental lease is a contract between a landlord and a tenant that outlines the terms and conditions…

Action Plan Jonathan Poland

Action Plan

An action plan is a detailed strategy that outlines the steps and resources needed to achieve a specific goal. It…

Retail Automation Jonathan Poland

Retail Automation

Retail automation refers to the use of technology to automate and streamline various processes in the retail industry, such as…

Market Risk Jonathan Poland

Market Risk

Market risk is the possibility that the value of an investment will decline due to changes in market conditions. This…

What is Big Data? Jonathan Poland

What is Big Data?

Big data refers to extremely large and complex datasets that are difficult to process using traditional data processing tools. These…

Internet of Things Jonathan Poland

Internet of Things

The Internet of things describes physical objects with sensors, processing ability, software, and other technologies that connect and exchange data with other devices and systems over the Internet or communication networks.

Forward Thinking Jonathan Poland

Forward Thinking

Forward thinking is the ability to anticipate and prepare for future events and trends in order to make informed and…

A/B Testing Jonathan Poland

A/B Testing

A/B testing, also known as split testing or experimentation, is a statistical method used to compare two versions of a…

Brand Strategy Jonathan Poland

Brand Strategy

Brand strategy is the plan that a company has for building and managing its brand over time. It involves defining…

Search →

There are two ways

to work with me…

for business

Key Bridge

“A platform for building better assets…”

for investing

Wall Street Pig

“Unfiltered commentary across the capital markets…”