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scale (in this context)

English translation: volume or size of company operations

GLOSSARY ENTRY (DERIVED FROM QUESTION BELOW)
English term or phrase:scale (in this context)
Selected answer:volume or size of company operations
Entered by: Charles Davis

23:34 Apr 23, 2015
English language (monolingual) [PRO]
Bus/Financial - Finance (general) / Stock market commentaries
English term or phrase: scale (in this context)
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!
Laura Vinti
United States
Local time: 02:38
volume or size of company operations
Explanation:
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.
Selected response from:

Charles Davis
Spain
Local time: 08:38
Grading comment
Selected automatically based on peer agreement.
4 KudoZ points were awarded for this answer



SUMMARY OF ALL EXPLANATIONS PROVIDED
4 +5volume or size of company operations
Charles Davis
4 +1rates
David Hollywood
5increased efficiency due to increased size
Charlesp


  

Answers


27 mins   confidence: Answerer confidence 4/5Answerer confidence 4/5 peer agreement (net): +1
rates


Explanation:
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.

David Hollywood
Local time: 03:38
Works in field
Native speaker of: English
PRO pts in category: 43

Peer comments on this answer (and responses from the answerer)
neutral  Peter Simon: Have to change my opinion, sorry.
5 hrs
agree  Jack Doughty
5 hrs
Login to enter a peer comment (or grade)

6 hrs   confidence: Answerer confidence 4/5Answerer confidence 4/5 peer agreement (net): +5
volume or size of company operations


Explanation:
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.

Charles Davis
Spain
Local time: 08:38
Native speaker of: English
PRO pts in category: 82
Grading comment
Selected automatically based on peer agreement.

Peer comments on this answer (and responses from the answerer)
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 :)
Login to enter a peer comment (or grade)

10 days   confidence: Answerer confidence 5/5
increased efficiency due to increased size


Explanation:
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."

Charlesp
Sweden
Local time: 08:38
Specializes in field
Native speaker of: English
PRO pts in category: 27
Login to enter a peer comment (or grade)



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