Specialisation

• Concentrating resources on a product or task
• Happens within businesses
• Can happen within a country, such as Bangladesh for textiles
• For specialised countries, they export the good they produce

Advantages

• Increased output. They can focus on being good at making a few goods / services. It is easier to focus on a single product and purchase the components required than to manufacture the components yourself. Fewer areas of expertise are required
• Cheaper products / costs of production. Focusing on one good allows you to produce it at scale, which means you can reduce production costs. You can do this by buying special machines that are more efficient that would not have been worth the investment before.

Disadvantages

• Less demand. Producing a smaller range of products means there are less customers want one of your goods so you may struggle to sell as many products as you could produce.

• Vulnerability. You are vulnerable to changes in wants of consumers. You are also more vulnerable to any laws that may be made, such as if you are producing tobacco. It may also make economies / businesses that depend on you vulnerable. If you go out of business there could be a lack of supply in a good, though this only applies for large businesses.