https://www.proz.com/kudoz/english/finance-general/5834375-scale-in-this-context.html

Glossary entry

English term or phrase:

scale (in this context)

English answer:

volume or size of company operations

Added to glossary by Charles Davis
Apr 23, 2015 23:34
9 yrs ago
18 viewers *
English term

scale (in this context)

English Bus/Financial Finance (general) Stock market commentaries
XXX (name of company) advanced as our thesis of ‘higher margins thanks to better scale’ played out after the release of fourth-quarter results.

I'm not sure what "better scale" means in this context.

Thanks!
Change log

May 7, 2015 04:39: Charles Davis Created KOG entry

Responses

+5
6 hrs
Selected

volume or size of company operations

It seems to me very unlikely that this is referring to differential interest rates on bank certificates of deposit. It's hard to see how that will have a significant impact on margins. In any case, this is surely talking about a company's results. Scale is some function of the company's operations.

I think the sense of "scale" here is the obvious one, the one referred to in "economies of scale": namely, the size of the company's operations, by some measure. "Higher margins" must, I think, refer to profit margins, the straightforward relationship between selling price and cost of production, which is what it means in a general business context:

"3. In a general business context, the difference between a product's (or service's) selling price and the cost of production.
http://www.investopedia.com/terms/m/margin.asp

The idea of economies of scale basically refers to the idea that increasingly the volume of a business operation increases profitability by reducing production costs per item. So margins are related to scale. That doesn't mean that higher scale = higher margins; on the contrary, smaller, specialised operations can charge higher prices and achieve high per-unit margins that way. But I think "scale" here must have its general business sense of size or volume of operations.

"Better scale" will not necessarily mean "larger scale", because increasing scale does not automatically, of itself, increase margins. The trick is to get the right scale for what you are doing.

--------------------------------------------------
Note added at 6 hrs (2015-04-24 06:24:48 GMT)
--------------------------------------------------

So "better scale" means "more suitable or favourable volume of operations".

--------------------------------------------------
Note added at 6 hrs (2015-04-24 06:25:49 GMT)
--------------------------------------------------

A further small point: note that it says "scale", not "scales"; if it referred to interest rates, it would surely be in the plural.

--------------------------------------------------
Note added at 7 hrs (2015-04-24 06:43:26 GMT)
--------------------------------------------------

This doesn't mean that "scale" is simply a synonym of volume. Obviously, other things being equal, any company wants to increase its sales volume. But not at any cost; higher volume will only produce higher margins if production costs are optimised. Scale includes all those aspects of its operation that entail costs, including staffing levels, number of branches, geographical extent of distribution, etc. The trick is to optimise the size of all these things.

--------------------------------------------------
Note added at 8 hrs (2015-04-24 08:30:47 GMT)
--------------------------------------------------

Maybe "scala" will do in Italian (you'll have to judge that); I believe economies of scale are called "economie di scala", and I think that's the sense in which "scale" is being used here.
Peer comment(s):

agree Tushar Deep
1 hr
Thanks again, Tushar :)
agree Peter Simon : On second thoughts, I have to agree with you here, although I agreed with the other solution before. It's probably about operational results rather than financial interest rates.
2 hrs
That's my reading. Many thanks, Peter!
agree Tina Vonhof (X)
8 hrs
Thanks, Tina :)
agree Phong Le
4 days
Thanks, Phong Le :)
agree Charlesp
10 days
Thanks, Charles :)
Something went wrong...
4 KudoZ points awarded for this answer. Comment: "Selected automatically based on peer agreement."
+1
27 mins

rates

Scale
Payment of different rates of interest on CDs of varying maturities. A bank is said to "post a scale." Commercial paper dealers also post scales.
Peer comment(s):

neutral Peter Simon : Have to change my opinion, sorry.
5 hrs
agree Jack Doughty
5 hrs
Something went wrong...
10 days

increased efficiency due to increased size

What is means is an increased efficiency due to an increased size, but if you don't want to use the term "efficiency" then consider "optimisation "
or "a more optimum scale."
Something went wrong...