Large firms enjoy favourable terms and conditions when it comes to raising finance. They tend to be able to borrow very large amounts of money from banks or other lending institutions and at lower interest rates. Consequently, lower interest payments mean larger firms enjoy higher profit margins due to the lower average costs of finance. Lenders show preference for lending to larger businesses with a proven track record and a diversified range of products.

By contrast, higher interest rates are charged to smaller businesses (especially start-up firms) because banks consider them to be of higher risk. This is because large firms with a strong balance sheet are more likely to repay their loans on time and in full, and have more collateral (financial security) to offer in case they default on repaying those loans. In general, smaller firms such as sole traders not only tend to struggle to raise external sources of finance, but are also charged higher interest rates on their borrowings.

There is also strong competition amongst commercial banks to lend money to large multinational businesses. Hence, a large and established business looking to borrow money is likely to be able to choose a lender that offers the most attractive (the lowest) interest rates, with preferential repayment terms and conditions.

While total marketing costs tend to increase as a business grows, they do not rise proportionately to sales revenue. If a business doubles its sales, it does not have to double its marketing expenses. This means that the average cost of marketing falls as a firm's sales increase.

For example, global firms such as Nike, Toyota, Samsung and The Walt Disney Company can spread the high costs of advertising and promotion by using the same marketing campaign across the whole world for all of their products. Very often, these multinational companies will promote their brand (such as Nike) rather than each single product from their vast product portfolios (such as Nike football, athletics, or basketball shoes).

Large firms can also benefit from lower average costs by selling in bulk, thus benefiting from reduced time and transactions costs. A small retailer will have to spend a lot more time and effort to sell 10,000 bottles of Pepsi Cola to hundreds of different individual customers than for PepsiCo itself to sell 10,000 bottles of Pepsi Cola in one transaction to a single wholesaler or supermarket.

Large firms can attract the best managers who can create a more productive working environment and encourage higher efficiency and goodwill from workers. As managers cannot be equally good at everything, specialisation and division of labour lead to higher productivity which then leads to lower average costs of output for larger firms. Through growth, a larger business can avoid the duplication of tasks in planning, communications, marketing, distribution, and production processes, all of which help to increase efficiency.

As a firm expands, it can afford to hire specialist managers for different functional areas of the business such as Marketing, Finance, Production (Operations management) and Human Resources (HR). These specialist managers will be operating more efficiently than a sole trader who would need to perform a range of different managerial roles that s/he may not be specialised in. Sole traders who have to perform many different tasks will not be efficient at any of those tasks, therefore does not benefit from this type of economy of scale.

The skills of specialist managers which allow them to do the job faster and without costly mistakes (because of their knowledge, skills, and experience) is a potential economy for larger organizations. Specialist managers improve the quality of business decisions compared with non-specialist managers or a sole trader trying to do everything on their own.

Modern technology enables businesses to produce very high levels of output at much lower unit costs than smaller firms can do. Large firms can afford to use sophisticated and specialised machinery to mass produce their output using flow production techniques. They are able to justify huge investments in mass production technologies (such as assembly lines) because working at a high capacity level can significantly lower average costs of production.

However, as mass production uses expensive capital equipment, only very large businesses can afford the level of capital investment required. Nevertheless, large firms can spread the high fixed costs over the high number of volume of output. For example, due to the extremely large scale of its production, the Foxconn's megafactories in Taiwan and China can produce iPhones and iPads 24/7 for Apple. The high fixed costs of their capital equipment and machinery are spread over the huge scale of output being produced for Apple, thereby reducing Foxconn's average costs of each product.

By contrast, small businesses find no practical reason for use of such technology. Even if small firms could afford to purchase the latest capital equipment and production technologies, they would be unlikely to keep these operating continuously due to the lower demand for their products.

Also known as ‘bulk-buying economies of scale’, purchasing economies of scale materialise when a firm buys in bulk, so can save money per unit purchased. Large firms can reduce their average costs by purchasing resources in bulk as they usually buy greater quantities of inventory (such as raw materials, component parts, and/or finished goods ready for sale).

The more items purchased at one time, the larger the savings (discounts) that their suppliers are likely to offer, thereby leading to a lower average cost of production. This is because it is cheaper for suppliers to process and deliver a large single order for one customer rather than smaller orders for many different smaller firms. Also, suppliers will be more keen to keep a very large customer happy due to the size of the order made on the large quantities sold.

Although small businesses can also gain some purchasing economies of scale due to bulk-buying discounts, the larger the order, the greater the reduction in unit costs. Hence, larger firms gain far more from purchasing economies of scale than smaller firms. Large firms are also usually able to hire specialist buyers who travel both nationally and internationally to visit various suppliers in order to negotiate and secure the best deals at the lowest prices possible.

These cost savings can be enjoyed by a conglomerate (a diversified company made up of numerous different businesses in unrelated industries).

Conglomerates can spread their fixed costs, such as Research and Development (R&D), accounting, recruitment, or advertising across a wide range of operations and their diversified product portfolios.

Unfavourable trading conditions for certain products in one market can be offset by more favourable trading conditions in other markets, or countries in which the firm operates. Hence, the loss in one industry, or in one market, does not jeopardize the overall existence of the conglomerate.

For example, it takes a considerable amount of investment and time for research and development to commercialise a product in the pharmaceutical industry, especially as new medicines have no guarantee of any commercial success. Therefore, this process can only be undertaken by large pharmaceutical companies with significant resources, such as the likes of AstraZeneca, GlaxoSmithKline, Johnson & Johnson, Merck, Novartis, Pfizer, and Sanofi.

This type of economies of scale results from the division of labour of the workforce (rather than the specialization of managers) in different parts of the production process.

Division of labour happens when the production process is split into different tasks and each worker repeatedly performs one of these tasks. When workers are trained in just one task (or a narrow range of tasks) and specialize in it, efficiency and output can be increased because the worker is able to complete her/his assigned task faster and more effectively. Also, less time is wasted moving from one workstation to another.

For example, Honda , the Japanese car manufacturer, uses mass production techniques and benefits from having specialist employees such as  designers, production workers, engineers, and sales representatives. These specialists are responsible for a single part of Honda's overall production process. Their unique expertise brings greater productivity and efficiency to the company.