Diseconomies of Scale | A-Level Economics Model Paragraph (AQA, Edexcel, OCR)

When firms become larger and larger, they are impacted by both economies of scale and diseconomies of scale at the same time. After a point, diseconomies of scale will outweigh economies of scale. This is when long run average cost increases due to a firm having an increase in output. As a firm like Starbucks is very large, staff may have less motivation to perfect their skills and perfect their customer service compared to a member of staff at a local cafe, therefore they may be less productive and produce/ work towards less output. Therefore, average cost of hiring staff is higher for a bigger firm. Also, if something is wrong in a large firm, such as a random light bulb, or an unproductive member of staff, it will take far longer to identify and solve the problem compared to this same issue in a small firm. These are known as communication and co-ordination diseconomies of scale.