Economies of scope refer to cost-saving strategic fits along the value chains of related businesses. This means that a firm with multiple businesses or product lines can share resources or activities and achieve cost savings. For example, a company that produces both paper and cardboard can save costs by using the same raw materials, production facilities, and distribution channels for both products. This is a strategic fit along the value chain of related businesses.

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Economies of Scope

Question 36

Multiple Choice

Economies of scope

A) stem from the cost-saving efficiencies of operating over a wider geographic area.
B) have to do with the cost-saving efficiencies of distributing a firm's product through many different distribution channels simultaneously.
C) stem from cost-saving strategic fits along the value chains of related businesses.
D) refer to the cost-savings that flow from operating across all or most of an industry's value chain activities.
E) arise from the cost-saving efficiencies of having a wide product line and offering customers a big selection of models and styles to choose from.

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