Let us talk about Economies Of Scope this time, Economies of scope is what companies look at for cost cutting in their activities. Companies produce different varieties of product that help to decrease their average cost of production.
Most trendy and interesting way through which companies practice Economies of scope nowadays is Mergers and Acquisition.
Let me give you the example of Pepsi co. as to how they save cost by production of two or more distinct product using same operations.
In beverages Pepsi Co.produces
-Pepsi
-Diet Pepsi
-Mountain Dew
-7up
- Gatorade
-Mirinda and many more
All these carbonated drinks have almost same operation for production i.e. they share common inputs but this diversification helps them in generating more revenue with cost savings.And same is the same if we take flavoured drinks like Tropicana, slice under PepsiCo.
Most trendy and interesting way through which companies practice Economies of scope nowadays is Mergers and Acquisition.
Let me give you the example of Pepsi co. as to how they save cost by production of two or more distinct product using same operations.
In beverages Pepsi Co.produces
-Pepsi
-Diet Pepsi
-Mountain Dew
-7up
- Gatorade
-Mirinda and many more
All these carbonated drinks have almost same operation for production i.e. they share common inputs but this diversification helps them in generating more revenue with cost savings.And same is the same if we take flavoured drinks like Tropicana, slice under PepsiCo.
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