In economics and business, economies of scope describe one firm benefiting from producing several related products together.
The idea is that the combined cost of making multiple products can be lower than the total cost of producing each product separately. Shared resources may create the benefit: distribution networks, factories, technology, marketing systems, research teams, or managerial capabilities can serve more than one offering.
Economies of scope differ from economies of scale. Economies of scale concern producing more of one product and lowering its average cost. Economies of scope concern the cost advantage of producing a wider range of products or services together. A company can experience one without necessarily experiencing the other.
Diversified businesses often seek scope economies, but diversification can also create complexity and inefficiency. The advantage exists only when shared resources reduce total costs or increase value enough to offset the added coordination required.