Economies of scope Question 21 options: stem from the cost-saving efficiencies of scattering a company's manufacturing/assembly plants over a wider geographic area. have to do with the cost-saving efficiencies of operating across a bigger portion of an industry's total value chain. stem from cost-saving strategic fits along the value chains of related multiple businesses.

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Amiya Bowen

Business

2 September, 04:53

Economies of scope Question 21 options: stem from the cost-saving efficiencies of scattering a company's manufacturing/assembly plants over a wider geographic area. have to do with the cost-saving efficiencies of operating across a bigger portion of an industry's total value chain. stem from cost-saving strategic fits along the value chains of related multiple businesses.

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Kaila Sanford · Answer 1

stem from cost-saving strategic fits along the value chains of related multiple businesses.

Marcelo Booth · Answer 2

Economies of scope stem from cost-saving strategic fits along the value chains of related multiple businesses.

Explanation:

Economies of scope holds that as more and more of different but related products are produced, the unit cost it takes to produce one product will reduce.

This happens because an organization that produces multiple similar products can streamline its processes and equipment such that it cuts out costs that would have been incurred if the products were produced separately. For example using one equipment to produce a variety of products decreases production costs.

Similarly, multiple related businesses, considering their resources, can take advantage of available opportunities they present each other, and streamline activities along their value chains to reduce costs.