Economies of scope occur where it is cheaper to produce a range of products rather than specialize in a handful of products.
Economies of Scope
For example, in the competitive world of postal services and business logistics, service providers such as Royal Mail, UK Mail, Deutsche Post and parcel carriers including TNT, UPS, and FedEx are broadening the range of their services and making better use of their collection, sorting and distribution networks to reduce costs and earn higher profits from higher-profit-margin and fast growing markets.
Another example of an economy of scope might be a restaurant that has catering facilities and uses it for multiple occasions – as a coffee shop during the day and as a supper-bar and jazz room in the evenings. A computing business can use its network and databases for many different uses.
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