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Question 1
(A) We are living in a time when technology is radically transforming the ways we do
different things, and business methods are no exception. In the recent years,
more and more users have started purchasing through online shopping sites
because of the benefits it offers to both buyers and sellers. I am also ambitious to
benefit from the opportunities afforded by e-commerce. I plan to start an online
store using which people will be able to sell their used sumptuous clothes, shoes,
and other items. On each sale/purchase, the store will charge commission based
on certain percentage of sale/purchase price.

Many people buy splendid and expensive clothes for special events and
ceremonies. There are also many people who have a love to keep their wardrobe
updated, and they frequently purchase new clothes, shoes, and jewelry items.
Majority of people never use such splendid clothes again and these clothes and
other items get wasted. Using my store, people will be able to sell their used but
just like new clothes and earn some money. Similarly, the store will be like a
blessing from the boon for those customers who intend to buy high quality items
at discounted price.

(B) Vision Statement

To maximize the joy of travel, we are ambitious to realize our dream of making
travel experience absolutely free from panic and inconvenience arising from on
road breakdowns.

Mission Statement
Using state-of-the-art equipment, our competent and certified technicians repair
breakdown vehicles as fast as possible and in competitive service charges, saving
your valuable time and relieving you from the panic of roadside breakdown.

(C) The mission statement highlights five essential features of our service: state-of-
the-art maintenance equipment, competent and certified staff, minimum repair
time, economics service charges, and least roadside trouble for our clients. The
first two components focus on our technical expertise. We use modern repair
equipment, and our staff is highly experienced and certified. Using modern
equipment, our expert technicians can repair vehicles in a very short time. The
third component of mission statement demonstrates this expertise of
Mechanic’s truck. We don’t charge high service charges. In fact, our services
charges are very economic and competitive. Cumulatively, all these service
features save our customers from the panic that arises from sudden vehicle
breakdown on road.

Question 2
When organizations increase their production beyond optimal levels or expand too
much, the unit production cost starts increasing, decreasing profit margins. This
phenomenon is known as diseconomies of scale. There are multiple factors that cause the
unit price to soar: congestion in workplace, dependencies in production process, ineffective
communication, and duplication of effort, slow response time, and need to maintain large
market share.

Congestion in Workplace
More machinery and manpower are required to boost the production. To
accommodate more machinery and manpower, small businesses try to install more
machines in existing production facilities. This increases obstruction in workplace, causing in
convenience for workers. Because of obstructions and more workers in the same production
hall, workers efficiency drop [ CITATION Jim19 \l 1033 ]. As a result, the production cost
rises. To avoid these problems, the enterprise might have to build new construction facility
whose excessive cost also causes diseconomies of scale.

Dependencies in Production Process

Every product is made from several distinct components. For small manufacturing
firms, it is easy to manage their production schedules. Small firms can schedule their
manufacturing process in a way that every component is produced in right quantity at right
time. Hence, unavailability of a specific component doesn’t affect the production process.
However, for large firms, it becomes very difficult to maintain such production schedules
and often unavailability of small components delay the production process. Consequently,
the cost of production increases.

Ineffective communication
In large organizations, several hundred people work. For more employees, it is
relatively difficult to communicate with each other as an employee might be busy at the
time when he/she is contacted. In large organizations, there are also multiple levels due to
which a message propagated from mangers might take more time to reach employees. Due
to these problems, the effectiveness of communication decreases. Employees cannot
communicate important information fast which has several consequences on production
process such as poor coordination, duplication of efforts and slow response time [ CITATION
CFI18 \l 1033 ].

Slow Response Time and Duplication of Efforts

As discussed in the previous paragraph, communication tends to become ineffective
as organization grows. Due to ineffective communication, important information cannot be
delivered in timely manner which ultimately result in slow response time and duplication of
efforts. The top managers of large organizations might get information about the effectives
of changes in production cycle, and it is quite possible that in 2 to 3 days significant harm
had already been done. For the same reasons, employee often don’t know what other
people are working on, and they also start performing same tasks which someone other is
already working on. All these factors lead to diseconomies of scale.

Need to maintain large market share

When production increases, it becomes the need of business enterprise to maintain
large market share so that it can sell large volume of produced products. For that businesses
have to find new markets and customers as well as to retain the previous one. All this mean
that they have to undertake extensive marketing efforts which increase overhead of
production costs and reduce gross profit margins.
REFERENCE:

CFI. (2018). Diseconomies of Scale. Retrieved September 18, 2019, from Corporate Financial
Institue:https://corporatefinanceinstitute.com/resources/knowledge/economics/diseconom
ies-of-scale/

Chappelow, J. (2019). Diseconomies of Scale. Retrieved September 18, 2019, from

Investopedia: https://www.investopedia.com/terms/d/diseconomiesofscale.asp