Re: #2 is concerning
You raised a Valuable point and in most cases Companies will go for Second Option as it saves them costs Directly and immediately.
But what happens in the Long-Run?
The Same Sole Employee gets over-burdened with responsibility,Takes breaks ,falls sick ,may get demotivated,etc.
Which means you will be stuck with Higher Costs(hiring and Training a Replacement or a Temp) over the Long-run.
Contrast that with what happens when you have a team of 5 such (maybe less qualified employees);A Situation will rarely arise where all 5 of them will leave Jobs together (as long as you have a fully professional Company).
Its definitely the right way of looking at things from a Long-term sustainability point of view.
Who knows,you could even Grow one of those employees to take on Higher level of Responsibility in the future?