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: How Does Specialization Help Companies Achieve Economies of Scale? Corporate Finance & Accounting Corporate Finance
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Thomas Brock is a well-rounded financial professional, with over 20 years of experience in investments, corporate finance, and accounting. Article Reviewed on May 03, 2021
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Thomas Brock
Updated May 3, 2021
Adam Smith is considered to be the father of modern economics. He laid out many economic theories that are studied and used to this day. One of his theories was that the division of labor through specialization will lead to growth. He described this idea as far back as 1763, in his book, An Inquiry into the Nature and Causes of the Wealth of Nations. Smith's belief was, that as a company grows, it is able to hire more workers, and hiring more workers allows a company to divide the workers into certain roles, meaning they will have fewer responsibilities and are able to improve and specialize in one core skill. Once a worker becomes more efficient at their task, this will result in increased production levels, utilizing less time and less cost. Let's take a look at the terminology behind Smith's theory.