Analyse two possible effects on WCP's efficiency of an increase in its scale of operations.

Mark scheme

Marking points from the official mark scheme (May/June 2025). The mark or mark type is shown in brackets.

1. [K1] Increasing scale of operations means that the firm has the ability to produce at a higher level.
2. [K1] Efficiency means the ability of the firm to convert inputs into outputs
3. [K1] Economies of scale are factors which cause average costs to decrease as output increased, such as purchasing, managerial, technical, and marketing.
4. [K2] Wider range of products to sell.
5. [K2] Ability to meet the needs of more customers.
6. [K2] Ability to benefit from economies of scale, such as technical, managerial, purchasing, marketing, financial.
7. [K2] Risk of diseconomies of scale, such as poor communication and industrial relations problems.
8. [APP] WCP use sustainable resources
9. [APP] If WCP take over GC this will be an increase in the scale of paper cleaning products operations
10. [APP] GC could add to range of eco-friendly paper products, increasing its product portfolio.
11. [APP] Potential economies of scale such as purchasing recycled paper or paper for recycling
12. [APP] Potential diseconomies of scale due to difficulties of communicating over long distances geographically
13. [APP] GC is based in the US, so there may be a chance of extending WCP's market there
14. [AN] Increase in scale increases output and may add to WCP's portfolio, meaning wider product range and more potential customers increasing revenue and therefore may increase profit.
15. [AN] Increased output leading to economies of scale and decreased average costs may lead to WCP able to decrease price and increase revenue if demand is price elastic.
16. [AN] Increasing scale of operations will enable the company to diversify and grow, increasing sales.
17. [AN] Diseconomies of scale may lead to increasing average costs due to communication problems, decreasing profit.