The minimum efficient scale of a firm is any firm whose stockholders can be seen to be operating at a loss.
We might find out that a lot of the companies we are using to keep a track of our finances are indeed not as efficient as they should be.
The minimum efficient scale is a rough mathematical model of how an organization or company is structured. For instance, Apple is an example of a firm that would fall into this category. Since its board of directors are all either Apple employees or shareholders, Apple needs to pay them a salary and provide a profit for itself.
We do not know how efficient Apple really is, but we do know that it is not efficient. Apple is a huge company that is built on a very inefficient system. Its structure is such that when it needs to pay its employees a wage, it doesn’t get paid until the end of the month. It then has to buy new computers and keep them running for a month before the employees can get paid.
That’s a pretty inefficient way to run a company. Apple is a very large company that is built on an inefficient system, with one employee being paid a wage right now. However, Apple does not have to pay a wage until the end of the month. It just has to pay its employees a wage right now, and only then will it be able to pay itself a profit. The best thing Apple can do is to pay its directors a salary right now.
You can get a very large company to run itself efficiently because of a very simple principle: The efficient scale. On the first floor of the building, all the office workers are paid by the hour, and they are paid hourly. By the second floor, all the janitors are paid by the hour, and they are paid hourly. Then on the third floor, the office workers become staff, and they are paid $15 an hour.
The second is the minimum efficient scale of a firm. There are only two pay scales. If you build a successful company, your board of directors can just pay you a salary of $10 an hour. If you fail, you have to pay all your employees a salary of $10 an hour.
I think the minimum efficient scale is a great metaphor for how a business works. It’s a measure of how many people are actually needed to make a profit. A business without staff can easily grow into a bunch of employees that can be very productive, but a business that can’t grow is useless. Of course, the minimum efficient scale is just a way to think about this, and it can be a bit arbitrary.
When I was running a small company (a startup), I used to have to make a living by the hour. Like, I had to put in my hours, pay my employees, and the like. That meant I was basically making my time out of my own pocket. The minimum efficient scale is a way to think about a company by its employees, as opposed to their time. You might think it’s a lot of time, but it’s not.