Large businesses tend to benefit more due to several factors resulting from economies of scale; this means that the company can benefit from the reduction of average costs in the long run, however small companies cannot obtain these benefits. For example, purchasing advantages where large companies are able to purchase raw materials in large quantities as they produce on a larger scale, they can therefore receive discounts and therefore reduce production costs. Or they might experiment with technical economies in which investments in more advanced machinery or larger facilities will allow firms to experience increasing returns to scale where output is greater than input, thus improving production efficiency through the division of labor and specialization with consequent cost reduction. Economies of scale can be illustrated in diagram 1, whereby as production increases (from Q to Q1), cost decreases (from C to C1). Minimum efficient scale is illustrated in the constant part of the QA labeled LRAC: firms operate at the sweet spot experiencing long-term constant average costs where economies of scale are exhausted; the company therefore operates with long-term production efficiency. This is why large companies are considered better than small businesses. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an original essay However, as the LRAC curve increases; Large businesses will experience diseconomies of scale. For example, as a company grows, control becomes more difficult, monitoring the productivity of each worker in a large company will become more challenging and may result in a loss of production efficiency and therefore an increase in average costs. Furthermore, combined with poor communication and coordination due to the growing size of companies, the increase in average costs is accelerated. Furthermore, because large companies are often joint-stock companies, ownership and control are often divided among a group of shareholders, so control over the company is not subject to one person but is instead managed by several directors who bring the interests of the shareholders. This makes large companies more difficult to manage as negotiations and meetings are required to perform various operations, thus reducing the efficiency of the company, while small businesses are usually owned by one person, so management and decisions can be made quickly. Communication and coordination in small businesses are also much easier to manage and less expensive due to fewer production factors. In this sense it can be argued that small businesses work more efficiently than large businesses.