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top   »  economics   »  business economics   »  critical mass

What is Critical Mass?

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Critical mass, in the context of economics, is the size that a company needs to reach in order to compete efficiently in a market. The critical mass required differs widely by industry and may be flexible depending on a firm's approach to the market. Industries such as the automotive industry generally require a firm to reach a large size to be competitive. Other industries, such as restaurants may allow a small competitor to be successful.
Critical mass can also apply at the product level. For example, an innovative new product needs a number of initial customers to review the product and get the word out before they can be successful.
Overview: Critical Mass
Function
Economics
Definition
The company size or sales volumes that are required to compete efficiently in a market.
Value
Critical mass leads to economies of scale and scope.
Related Techniques
Economies Of Scale
Diseconomies Of Scale
Economies Of Scope

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