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Scale paradox: Difference between revisions
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[[File:Grima.jpg|thumb|A revenue generating business unit at its [[opco]] yesterday]] | [[File:Grima.jpg|thumb|center|450px|A revenue generating business unit at its [[opco]] yesterday]] | ||
}}{{a|risk|}} | }}{{a|risk|}} | ||
The '''[[Scale paradox]]''': Paradoxically, the pursuit of economies of scale ''in itself'' increasingly undermines the natural economies of scale. There is a natural upper bound to the effective size of a firm, wherein the marginal cost of the machinery required to pursue economies exceeds the marginal benefit to be gained by realising those economies. This point - a point beyond which every financial services firm operates - is a kind of [[Schwarzschild radius]] with two consequences: | The '''[[Scale paradox]]''': Paradoxically, the pursuit of economies of scale ''in itself'' increasingly undermines the natural economies of scale. There is a natural upper bound to the effective size of a firm, wherein the marginal cost of the machinery required to pursue economies exceeds the marginal benefit to be gained by realising those economies. This point - a point beyond which every financial services firm operates - is a kind of [[Schwarzschild radius]] with two consequences: | ||