when applied to institutions scalability refers to the ability to handle increased market demands a scalable company in the corporate world can maintain or improve its profit margins while sales volume increases the term can also apply to systems like computer networks 
understanding scalabilityscalability refers to an organization s ability to grow without being hampered by its structure or available resources when faced with increased production whether in a financial context or within the context of business strategy the idea of scalability has become more relevant as technology makes it easier to acquire customers expand markets and scale up this concept is closely related to the term economies of scale which refers to the way a company can reduce its production costs and increase profitability when it produces more of a given product by effectively spreading production costs over a greater number of units the company makes each of them less expensive to produce diseconomies of scale occurs when increased production leads to greater costs and lower profits according to a study by the management consulting firm mckinsey company while most companies tend to focus on launching new businesses the real value comes from being able to scale them up based on an analysis of u s venture capital vc data two thirds of value is created when a company scales up to penetrate a significant portion of the target market 1example of scalability in the tech sectorsome tech companies have an ability to scale quickly putting them in the coveted category of high growth enterprises the reason can be a lack of physical inventory and a software as a service saas model of producing and delivering goods and services companies with low operating overhead and little to no burden of warehousing or maintaining an inventory don t require a lot of resources or infrastructure to grow rapidly even companies that aren t directly related to the technology industry have a greater ability to scale up by taking advantage of technologies customer acquisition through the use of tools like digital advertising has become a lot easier and far less expensive banks can use digital advertising strategies to increase sign ups for online banking services expanding their customer base and revenue potential other technologies that help with scaling include labor saving innovations like automated warehouse management systems that are used by large retailers like amazon and walmart 