Examples of economies of scope in the following topics:
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- M&As are a form of inorganic growth.
- Factors that matter include lower costs–shared activities, shared resources, economies of scale or scope-, and increased willingness to pay.
- The Better Off Test in the context of horizontal scope: Can a firm achieve lower average costs or higher average prices by including multiple business units in same firm?
- Economies of scope (aka, synergies) make product diversification efficient if they are based on a similar common use.
- Diversify if (cost of having units A & B in same firm) < (cost of unit A in firm A) + (cost of unit B in firm B) - Boost in Willingness To Pay (aka, cross-selling) - Diversify if (WTP of activities A & B if done in same firm) > (WTP of activity A in firm A) + (WTP activity B in firm B)
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- The reasoning behind M&A's can vary, ranging from deriving competitive advantages to economies of scale, economies of scope, international expansion, vertical integration, access to unique assets, and perhaps most common today for the acquisition of valuable intellectual property (IP).
- Over time, acquisitions have moved through a number of 'waves' from a strategy point of view, most recently in order to pursue globalization.
- The mergers and acquisitions by these five companies alone represents the acquisition of hundreds of business and hundreds of billions of dollars.
- Let's look at a few of the largest, most recent acquisitions from some of these influential companies to appreciate the scope and frequency of modern acquisition strategies.
- One particularly notable recent acquisition for Microsoft was that of Nokia for a total of $7.2 billion in 2013.
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- International operations are therefore a direct result of either achieving higher levels of revenue or a lower cost structure within the operations or value-chain.
- MNC operations often attain economies of scale, through mass producing in external markets at substantially cheaper costs, or economies of scope, through horizontal expansion into new geographic markets.
- As gross domestic product (GDP) growth migrates from mature economies, such as the US and EU member states, to developing economies, such as China and India, it becomes highly relevant to capture growth in higher growth markets. is a particularly strong visual representation of the advantages a global corporation stands to capture, where the darker green areas reppresent where the highest GDP growth potential resides.
- Ethics: Arguably the most substantial of the challenges faced by MNCs, ethics have historically played a dramatic role in the success or failure of global players.
- Combining these four challenges for global corporations with the inherent opportunities presented by a global economy, companies are encouraged to chase the opportunities while carefully controlling the risks to capture the optimal amount of value.
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- A global functional structure is often adopted by companies with a very limited product scope.
- Therefore, economies of scale can be achieved by grouping these resources by function.
- Economies of scale and scope are more difficult to achieve as this organization structure encourages less cooperation and coordination across the product units.
- Economies of scale will be harder to achieve as different localities develop and implement very different product strategies o one hand, and invest resources in developing local functional expertise and effort which may well be duplicated unnecessarily across geographic units.
- In other words, they would like to achieve economies of scale where appropriate, but do not want to lose the ability to respond to product/customer and geographic needs more effectively.
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- A Mixed Economy exhibits characteristics of both market and planned economies, with private and state sectors providing direction.
- A mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies.
- Most mixed economies can be described as market economies with strong regulatory oversight, in addition to having a variety of government-sponsored aspects .
- While there is not one single definition for a mixed economy, the definitions always involve a degree of private economic freedom mixed with a degree of government regulation of markets.
- Subsequently, some mixed economies have expanded in scope to include a role for indicative economic planning and/or large public enterprise sectors.
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- If company A sold 600 of those baubles, they have 60% of the market share.
- Market share is a key indicator of market competitiveness—that is, how well a firm is doing in terms of its competition.
- Increasing market share is one of the most important objectives of business.
- The main advantage of using market share as a measure of business performance is that it is less dependent upon macroenvironmental variables, such as the state of the economy or changes in tax policy.
- The reasons for these disparities include variations in the lenses through which share is viewed (units versus dollars), where in the channel the measurements are taken (shipments from manufacturers versus consumer purchases), market definition (scope of the competitive universe), and measurement error.
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- For local governments, there are a great deal of legislative and contractual considerations when allowing franchising into the economy.
- The number of global franchises has seen a great deal of expansion in recent years, particularly with emerging economies (such as the BRIC grouping) seeing substantial growth and increased purchasing power.
- McDonald's, KFC, and a variety of other small food chains have distinctly different menu items depending on where in the world you are when you visit one of these chains.
- As of 2014, KFC carried out operations in all of the countries highlighted in green.
- Localizing, adapting to culture, and expanding their scope to this level of global operating is evidence of just how advantageous franchising can be as an expansionary tool.
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- Inventory management is required at different locations within a facility or within multiple locations of a supply network to maintain the regular and planned course of production and to manage the risk of running out of materials or goods for sale.
- The scope of inventory management also involves stock replenishment lead time, carrying costs of inventory, asset management, inventory forecasting, inventory valuation, inventory visibility, future inventory price forecasting, physical inventory, available physical space for inventory, quality management, returns and defective goods, and demand forecasting .
- Economies of scale: The idea of "one unit at a time, at a place where a user needs it, when they need it" tends to incur lots of costs in terms of logistics.
- So bulk buying, movement, and storing brings in economies of scale and creates inventory.
- These types of agreements typically have a longer duration and increased scope to maximize the quantities of scale concept.
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- There are few clear examples of purely socialist economies; nonetheless, many of the industrialized countries of Western Europe experimented with one form of social democratic mixed economies or another during the twentieth century, including Britain, France, Sweden, and Norway.
- They can be regarded as social democratic experiments, because they universally retained a wage-based economy and private ownership and control of the decisive means of production.
- A planned economy is a type of economy consisting of a mixture of public ownership of the means of production and the coordination of production and distribution through state planning.
- In socialism, planning refers to production of use-value directly (planning of production), while in capitalist mixed economies, planning refers to the design of capital accumulation in order to stabilize or increase the efficiency of its process.
- Socialism is an economic system characterized by social ownership, control of the means of production, and cooperative management of the economy.
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- One of the core functions of a manager is building and maintaining a team, which is accomplished through staffing responsibilities.
- Finding talent is an enormous challenge and opportunity in today's economy.
- With the diversity of skill sets, the high volume of applicants, and the growing complexity of organizational needs, managers are busier than ever when it comes to the hiring process.
- When combining all of these responsibilities, you have one facet of a manager's overall responsibilities.
- This provides some scope to not only how much is involved in staffing, but how much can be involved in the role of management in general.