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 kindred principle which is to dismount the production address, cost savings and setoff the marketing warring returns in gild to arrive at the utmost return. However, they have different approach and strategy to save cost and increase return. The concept of economies of scale is cost savings that descend from increases or expands in size or number. If two plants kick upstairs equivalent social unit, unit cost are generate 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 get or staying large, thither are significant economies of scale. For economies of scale, a little firm has higher(prenominal) costs than the larger firms, thus a smaller firm is hardly to compete with the larger firms in ground of price. In contrast, Economies of scope are cross-business cost-saving opportunities. The concept of economies of scope is cerebrate to diversification. It is less pricey to carry out certain survey 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 attach to save money, there are certain methods, for ex adenosine monophosphatele, communion technology, performing R & D together, manduction manufacturing or distribution facilities, using a common sales haul or distributor network, sharing an established brand name, and shari! ng administrative support functions. frankincense greater the economies of scope affiliated with cross-business cost-saving opportunities, creating a competitive advantage has greater potential which ground 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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