Resource Sharing
Utilization of same resources, technology, or processes across multiple products or services
Economies of Scope in Finance
Understanding how diversification can lead to cost efficiency and competitive advantage
What are Economies of Scope?
Economies of scope occur when the average total cost of production decreases as a result of increasing the variety of goods produced. This concept is fundamental in modern business strategy, particularly in financial institutions where resources can be shared across multiple product lines.
Key Components
Cost Allocation
Distribution of fixed costs across various product lines
Operational Efficiency
Improved productivity through diversified production