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It seems great until you understand what economies of scale mean. A big group is likely to ultimately win over several groups collectively of same size. Howeve

by Joakal 16y ago

It seems great until you understand what economies of scale mean. A big group is likely to ultimately win over several groups collectively of same size. However, people with knowledge that computers can't yet automate; will be pretty valuable (Try online self-diagnosis..).

kiba 16y ago
Large organizations can suffer from diseconomy of scale. Office politics, slow response time, and duplication of effort are some of the problems that decrease the efficency of large corporations. Which is to say, big doesn't alway win either.
- tsotha 16y ago
  Not always, but the rise of information technology allows big groups to cut the large company overhead in a way they never could in the past. Recent technologies favor large (sometimes stupendously large) groups over small ones, so if large corporations were viable at all in the '70s, they're much more viable now.
  - stretchwithme 16y ago
    I think my point is that the cost of integrating the work of many into a small business are going to drop. I believe (and am probably alone in this belief :-)) that there is still an inherent tax advantage to having everything in one entity that probably outweighs the disadvantages of coordinating a large group. A group of 100 members trades internally without paying taxes on these transactions, but everything between independents has some tax effects for at least one side. If this advantage were removed by some kind of tax reform, I suspect corporations would be smaller on average. Getting back to the entrepreneur, even if there are many standard-izable things in a process, there are costs to outsourcing those things. Automation of physical logistics may greatly reduce these costs, making it possible to focus on just the unique value one can add and be rewarded.
    - tsotha 16y ago
      Where I live you only pay sales taxes at the retail level - companies earlier on in the supply chain don't pay anything. I think that's pretty standard, actually, and for the reasons you discussed. Or were you talking about some other kind of tax?
      - stretchwithme 16y ago
        bingo. Companies that only trade with companies still pay income taxes on their profits, at least here in the US. Not sure how big an effect this is or it has been studied at all. I guess the costs of doing business with another entity should also be considered and maybe they are more significant. Just having to evaluate vendors, do POs, trying to collect, etc, are also costs avoided inhouse.

by Joakal 16y ago

kiba 16y ago

Large organizations can suffer from diseconomy of scale. Office politics, slow response time, and duplication of effort are some of the problems that decrease the efficency of large corporations. Which is to say, big doesn't alway win either.

tsotha 16y ago
Not always, but the rise of information technology allows big groups to cut the large company overhead in a way they never could in the past. Recent technologies favor large (sometimes stupendously large) groups over small ones, so if large corporations were viable at all in the '70s, they're much more viable now.
- stretchwithme 16y ago
  I think my point is that the cost of integrating the work of many into a small business are going to drop. I believe (and am probably alone in this belief :-)) that there is still an inherent tax advantage to having everything in one entity that probably outweighs the disadvantages of coordinating a large group. A group of 100 members trades internally without paying taxes on these transactions, but everything between independents has some tax effects for at least one side. If this advantage were removed by some kind of tax reform, I suspect corporations would be smaller on average. Getting back to the entrepreneur, even if there are many standard-izable things in a process, there are costs to outsourcing those things. Automation of physical logistics may greatly reduce these costs, making it possible to focus on just the unique value one can add and be rewarded.
  - tsotha 16y ago
    Where I live you only pay sales taxes at the retail level - companies earlier on in the supply chain don't pay anything. I think that's pretty standard, actually, and for the reasons you discussed. Or were you talking about some other kind of tax?
    - stretchwithme 16y ago
      bingo. Companies that only trade with companies still pay income taxes on their profits, at least here in the US. Not sure how big an effect this is or it has been studied at all. I guess the costs of doing business with another entity should also be considered and maybe they are more significant. Just having to evaluate vendors, do POs, trying to collect, etc, are also costs avoided inhouse.