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As illogical as the title of this node may sound, it is actually a sound principle when considering the expansion of a business or the addition of employees - that the addition of another unit of labor will not have a corresponding increase in production. There are several reasons for this:

  • Every unit added will incur overhead, especially in the case where a business is moving from one to two. This overhead limits how much increase in production the addition of a new unit may bring.
  • Related to the previous point, the necessity of adding a layer of management may result in further inefficiencies.
  • If two units are placed in close proximity to one another (i.e. if a restaurant adds a new location within the same geographical location as an existing facility), then the new unit may cannibalize some of the existing unit's userbase, causing the existing location to see a loss.
  • There is an optimum number of units in any given area or project, and further expansion beyond that number will cause inefficiencies to develop - too many cooks spoil the broth, after all.
That's not to say that expansion is a bad decision (after all, compare the revenue of McDonalds as a whole to the revenue of the most successful single location restaurant, and you'll see there is a magnitude of difference), but that one should not expect that if one unit produces x amount of something, then two should produce 2x.

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