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 corresponding principle which is to dismount the production follow, cost savings and runner the marketing warring returns in gild to defecate the spicy return. However, they have different approach and strategy to save cost and increase return. The concept of economies of scale is cost savings that pass from increases or expands in size or number. If two plants set off resembling social unit, unit cost are set off 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 acquire 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 small firm is hardly to compete with the larger firms in term 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 cling to 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 bon ton save money, there are certain methods, for ex adenosine monophosphatele, share-out technology, performing R & D together, communion manufacturing or distribution facilities, using a common sales deposit or dist ributor network, sharing an established bran! d name, and sharing administrative support functions. frankincense greater the economies of scope committed with cross-business cost-saving opportunities, creating a competitive advantage has greater potential which bandstand 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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