Economies of Scope

• What are economies of scope?

  Cost advantages from offering a variety of products
• How do economies of scale differ from economies of scope?

  Economies of scale focus on volume, scope on variety
• What happens to average cost per unit as volume increases in economies of scale?

  Average cost per unit falls
• What is the focus of economies of scope?

  Offering a range of products
• Why can offering a variety of products reduce average cost per unit?

  Costs are distributed across multiple products
• How does existing infrastructure contribute to economies of scope?

  It allows cost distribution across products
• What is the relationship between economies of scope and diversification?

  Diversification can reduce average cost per unit
• How do economies of scope relate to the Ansoff matrix?

  They are linked to diversification strategies
• What are the advantages of economies of scope?

  Reduces average cost and leverages brand loyalty
• How does leveraging existing brand loyalty benefit economies of scope?

  It enhances competitive pricing and market presence
• What is one key benefit of economies of scope for businesses?

  Becoming more price competitive
• How does Amazon utilize economies of scope in its business model?

  By offering diverse products and services