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Economies of Scope

Economies of scope refers to the cost advantages that arise when multiple products are produced in the same firm rather than separately. Producing a variety of goods allows companies to make more efficient use of resources like marketing, sales forces, and distribution channels. It also enables cost savings through synergies between products and using byproducts. While economies of scale benefit single-product firms, economies of scope provide advantages for multi-product companies through product diversification and combined scale and scope effects for market-dominant businesses.

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132 views

Economies of Scope

Economies of scope refers to the cost advantages that arise when multiple products are produced in the same firm rather than separately. Producing a variety of goods allows companies to make more efficient use of resources like marketing, sales forces, and distribution channels. It also enables cost savings through synergies between products and using byproducts. While economies of scale benefit single-product firms, economies of scope provide advantages for multi-product companies through product diversification and combined scale and scope effects for market-dominant businesses.

Uploaded by

manchana
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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Economies of Scope

-Rishad T A
-TPS-B
-18098
Defenition

An Economic theory stating that the


average total coast of production decreases
and scope of marketting and distribution
increases as a result of increasing the
number of different goods produced.
Advantages
Efficient use of media
P & G
Efficient use of sales force
Synergies
Distribution
Coast saving
Byproducts- eg- Bio Mass
Resources – eg- Mc Donalds
Product Diversification
To sum up
There are economists arguing it is industry
specific
Single product- Economies of scale
Multi product- Economies of Scope
Market Dominance- Scale + Scope

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