Economies of Scope and Scale
What are they? What is the key difference between an economy of scale and an economy of scope? https://cdnapisec.kaltura.com/index.php/extwidget/preview/partner_id/956951/uiconf_id/38285871/entry_i d/1_e6f88crm/embed/dynamic
One source of growth is external growth from a merger and/or acquisition. Often merger/acquisition are justified on the basis of the expected benefits from ‘synergies’ created by the merger/acquisition. Economists know these as economies of scale and economies of scope.
Select one of the below mergers and acquisitions and determine if the synergies come from
economies of scope or economies of scale. Make sure you provide a clear explanation of the
difference between economies of scope and economies of scale. The link above is to some help
provided by Dr Cruceru.
a) Sirius XM acquires Pandora;
b) the yet to be concluded merger of Sprint, T-Mobile and Metro PCS; (this is the merger I chose)***
c) the merger of Strayer University and Capella; or
d) the Renault/Nissan/Mitsubishi Alliance.