The other day, my household experienced one of the great tragedies of the home delivery era: our grocery delivery was canceled.
You know what that means. I had to go to the grocery store. Like, physically, in person, go inside the grocery store.
I survived, but phew. Let’s just say there were a few close calls.
All in all, though, it was a successful trip. I picked up a couple of prescriptions, had an eye exam, switched the pet insurance, got some advice about first-time homeownership, and even remembered to get dinner fixins. I would’ve gotten my oil changed and tires rotated, too, but I don’t have a car so… Yeah. I didn’t do that.
This is what economies of scope look like. Economies of scope are when it’s more cost-effective to produce related items together than it is to produce them individually. In the 21st century economy, it’s also an increasingly familiar model as brands continue to expand their offerings to consumers.
As a consumer, this model is great. We don’t have to run around all over the place to take care of all our responsibilities. For companies, it’s not a bad model, either.
Economies of scope – offering all of these services under one roof – companies are actually spending less by offering more.
But wait – how does that work?
Well, I’ll tell you:
- What do we mean by economies of scope?
- Economies of scope: Pros and cons
- Economies of scope vs economies of scale
- Economies of scope in action
- If all your friends jumped off a bridge…