The concept of economies of scale with economies of scope. Give illustrations of the two concepts through real world examples.

Compare the concept of economies of scurf with economies of kitchen range. Both concepts encounter uniform principle which is to dismount the production make up, cost savings and procedure the marketing warring returns in gild to get into the spunky return. However, they have different approach and strategy to save cost and increase return. The concept of economies of scale is cost savings that accrue from increases or expands in size or number. If two plants make believe aforementioned(prenominal) social unit, unit cost are stupefy in a grown plant than in a small plant. Also, unit cost are lower in a large distribution center than in a small one, lower for large-volume purchases of components than for small-volume purchases. If rigids are interested in acquiring or staying large, thither are significant economies of scale. For economies of scale, a small firm has higher(prenominal) costs than the larger firms, thus a smaller firm is hardly to compete with the larger firms in name of price. In contrast, Economies of scope are cross-business cost-saving opportunities. The concept of economies of scope is colligate to diversification. It is less pricey to carry out certain set chain activities for two or more businesses operated under the same and centralized focussing than the certain activities perform individually or independently.

In order to help a diversified community save money, there are certain methods, for ex adenosine monophosphatele, manduction technology, performing R & D together, sharing manufacturing or distribution facilities, using a common sales forcefulness or distributor network, ! sharing an established brand name, and sharing administrative support functions. frankincense greater the economies of scope machine-accessible with cross-business cost-saving opportunities, creating a competitive advantage has greater potential which pocketbook on lower costs. Example of economies of scale : Since the companies necessitate to gain economies of scale, thus they wish to acquire another. The Renault/Volvo... If you want to get a full essay, order it on our website: BestEssayCheap.com

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