What does economies of scope mean?
Definitions for economies of scope
economies of scope
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Wikipedia
Economies of scope
Economies of scope are "efficiencies formed by variety, not volume" (the latter concept is "economies of scale"). In economics, "economies" is synonymous with cost savings and "scope" is synonymous with broadening production/services through diversified products. Economies of scope is an economic theory stating that average total cost of production decrease as a result of increasing the number of different goods produced. For example, a gas station that sells gasoline can sell soda, milk, baked goods, etc. through their customer service representatives and thus gasoline companies achieve economies of scope.
Wikidata
Economies of scope
Economies of scope are conceptually similar to economies of scale. Whereas economies of scale for a firm primarily refers to reductions in the average cost associated with increasing the scale of production for a single product type, economies of scope refers to lowering the average cost for a firm in producing two or more products. The term and the concept's development are attributed to Panzar and Willig. Here, economies of scope make product diversification efficient if they are based on the common and recurrent use of proprietary know-how or on an indivisible physical asset. For example, as the number of products promoted is increased, more people can be reached per unit of money spent. At some point, additional advertising expenditure on new products may become less effective. Related examples include distribution of different types of products, product bundling, product lining, and family branding. If a sales force sells several products, it can often do so more efficiently than if it is selling only one product. The cost of its travel time is distributed over a greater revenue base, so cost efficiency improves.
Numerology
Chaldean Numerology
The numerical value of economies of scope in Chaldean Numerology is: 9
Pythagorean Numerology
The numerical value of economies of scope in Pythagorean Numerology is: 6
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"economies of scope." Definitions.net. STANDS4 LLC, 2024. Web. 20 Apr. 2024. <https://www.definitions.net/definition/economies+of+scope>.
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