Title: How Does Specialization Help Companies Achieve Economies of Scale?
Headings: How Does Specialization Help Companies Achieve Economies of Scale?
How Does Specialization Help Companies Achieve Economies of Scale?
Economies of Scale
Specialization
Specialization Leads to Economies of Scale
Example of Specialized Labor and Economies of Scale
Additional Economies of Scale
The Bottom Line

Content: Example of Specialized Labor and Economies of Scale
An assembly line for a manufacturing company provides a useful example of specialization leading to economies of scale. Suppose a bicycle manufacturer has 10 workers each assembling 10 bicycles simultaneously. The time for one individual to assemble a bike could be considerable. In addition, the know-how of having to put multiple pieces together requires the need for more skills. If the bicycle maker switches to an assembly line in its factory, each of the 10 workers focuses on a specialized aspect of the assembly process. For example, one worker would add the breaks, the next worker would add the pedals, and so forth. Each worker would become proficient in their specific task and allow the bike to be assembled faster as it moves down the assembly line. This increases efficiency and allows for additional bicycles to be produced. Because production increases, the fixed costs of production such as the building and tools used to assemble the bicycles are spread over an increasing number of products, thus achieving economies of scale. Additional Economies of Scale
Though specialized labor is one method that leads to economies of scale, economies of scale can be achieved through a variety of means.