Which strategy allows larger businesses to achieve higher productivity by producing in larger quantities?

Production Economies of Scale refers to the cost advantages that larger businesses experience due to the scale of their operations. As a company increases its production levels, it can spread its fixed costs—such as administrative expenses, rent, or machinery—over a larger number of goods. This typically leads to a reduction in the average cost per unit. Additionally, larger businesses may negotiate better prices for raw materials due to bulk purchasing or may utilize more efficient production techniques that are not viable for smaller operations.

This strategy is critical for larger businesses aiming to increase productivity because as they scale up, they become more efficient and can lower prices, which can improve their competitiveness in the market. The increased output often leads not only to cost reductions but also to enhanced revenue opportunities, enabling these businesses to maintain a higher level of profitability than their smaller counterparts.

Other strategies listed, while valuable in their own right, focus on different aspects of business operations, such as expanding market presence, analyzing costs at the individual unit level, or improving logistics and supplier relationships, rather than directly addressing the efficiencies gained from increased production volumes.