GAOIRAN, ANALYN

BSECON 2-5
202102420

1. What are the reasons for MG Rovers' diseconomies of scale?

Diseconomies of scale arise for a variety of reasons, but they all stem from the
challenges of managing a larger workforce. These are the reasons for MG Rover’s
diseconomies of scale because of the Lack of production volume, Lack of R&D
Capacity, Poor Model Range, Lack of International Markets, Negative Publicity, and
the last reason is Lack of Cash.
Diseconomies of Scale and Their Causes Diseconomies of scale can be
produced by a variety of conditions, including a failure of communication, a lack of
motivation, poor coordination, and an insufficient focus on the side of management
and personnel. Internal inefficiencies are usually caused by a lack of efficient or
professional management. When a company grows beyond a particular size, it
becomes difficult for the management to effectively oversee it or coordinate the
manufacturing process.

2. Explain how innovation and a good research and development capacity could
have saved MG
The ability to innovate and conduct effective research and development
could have saved MG Rover. We all know that innovation can easily solve problems
and boost a company's efficiency; similar to how research and development may be
able to boost productivity or lead to the development of new lines of goods.
Research and development efforts are at the heart of it, allowing scientists and
researchers to create new knowledge, methodologies, and technologies. People can
produce more with the same or fewer resources as technology advances, resulting in
increased productivity. MG Rover grows in tandem with its output. Research and
development help a firm to stay ahead of the pack. A corporation that does not have
an R&D program may not be able to continue on its own and will have to rely on
other methods of innovation, such as mergers and acquisitions or collaborations.
Companies can utilize research and development to produce new commodities and
enhance old ones. More rapid technological change has driven up the costs of new
model development, putting pressure on firms to recover costs; more international
sourcing of components, with a greater role for larger first-tier suppliers; and a shift
of labor-intensive assembly operations to lower-cost locations as trade barriers have
come down and globalization has precluded.