Scalability is the degree to which adding resources improves results. A scalable business or technology allows unit costs to drop costs as you add resources such as capital and labor. The following are illustrative examples.
RetailA retail chain is typically considered scalable as long as it can launch new stores without declines in same-store sales.
Productivity In many cases, adding new staff to a project or process results in drops in average productivity as the work to coordinate with more people outweighs their labor. A process or project is scalable if you can add people without declines in productivity.
ComputingHistorically, adding more computers to a problem involved quite a bit of overhead such that scalability was limited. Modern techniques such as cloud computing have overcome such problems to the extent that services can be designed to be deployed at scale that is only limited by physical realities such as the number of data centers you can afford to build.
SustainabilitySolving environmental problems may require clean industries that are cheaper and more scalable than polluting alternatives.
ManufacturingManufacturing tends to scale well until you need to add new equipment or factories. If you can produce a maximum of 10,000 units a day in a factory, producing 10,001 units a day is going to be expensive because you need a new factory.
Business ModelA company that is growing its revenue by 90 percent a year looks attractive to novice investors who don't notice that expenses directly related to sales are increasing by 220 percent a year. It is almost always possible to generate sales by spending a lot of money. As such, investors in growth companies will carefully inspect results for signs that revenue can be scaled profitably.
SalesA company hires 100 salespeople at a total annual cost of 20 million. Sales only improve by 15 million, indicating their business model may not be scalable. If sales improved by 100 million, the company would have an indication that sales are scalable.
This is the complete list of articles we have written about management accounting.
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A guide to management techniques.
A list of techniques for developing and implementing a strategy.
The basics of productivity.
A guide to project management.
A list of common management strategies.
The common types of internal benchmarking.
A definition of internal customer with examples.
A definition of business optimization with examples.
The common types of team objective.
A definition of internal stakeholder with examples.
The common types of management planning.
A definition of management with examples.
A list of business analysis techniques and deliverables.
The common types and formats of requirements.
The difference between business analysis and business architecture.
A few examples of common process gaps.
A definition of best in class with examples.
The common types of data analysis.
Common types of technical feasibility.
The common types of requirements elicitation.
A definition of requirements management with examples.
The common types of specification.
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