Internal and External Economies:

Scale of production helps us to divide the economy of firm or industry into two types.

Internal Economies:

In internal economies, we discuss the internal matters of firm or industry. For example: skills of an entrepreneur etc.This type is used to achieve more production of goods in low capital. The following are the different methods to achieve internal economy in business:

Commercial Economies:

In internal economies raw material should be purchased in bulk form because it will be available in little cost.

Financial Economies:

In this type we produce goods in large scale, so getting loans from banks are very easy.

Administrative Economies:

In large scale production well trained and skilled labor is used, instead of increasing the numbers of laborer.

By-products Economies:

In internal economies, the rest of the raw material can be used in producing low quality goods.

External Economies:

External economies are not related with any single firm or industry. From these economies all of the firms are benefited equally.

Facilities of Banks:

Bank always give priority to open there branches in commercial areas, so banks nearby helps to obtain loan.

Transportation:

Government gives the facilities to the production industries then new roads and railway tracks are built. These roads are really helpful to industries, to transport their products.

Research Centers:

Research centers are opened in the industrial areas, which are really helpful for industries to achieve the cheaper ways of production.

Repairing Centers:

Repairing centers help industries in the situations of any wear and tear of machines.

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