You are on page 1of 4

INTRODUCTION

In any business the ultimate goal of management is to maintain profits. The company can get
more profits in different ways, like reducing the cost of production, mass production etc. In
minimising the cost, the most efficient tool is economies of scale, which means reducing the cost
per unit of a product. In the same way some companies follow another technique called
economies of scope. This is also one type of cost reduction technique.
DEFINITION OF ECONOMIES OF SCOPE
Economies of scope refer to the reduction of per unit costs through the production of wider verity
of goods or services.
An economic theory stating that the average total cost of production decreases as a result of
increasing the number of different goods produced.
MEANING OF ECONOMIES OF SCOPE
Cost analysis focuses on the amount and combination of products that should be offered. By
virtue of their efficiency in the production of a given product, firms often enjoy cost advantages in
the production of related products.
If a single firm can jointly produce goods X and Y more cheaply that any combination of firms
could produce them separately, then the production of X and Y is characterized by economies of
scope.
CONCEPT OF ECONOMIES OF SCOPE
Economies of scope exist when the cost of joint production is less than the cost of producing
multiple outputs separately. A firm will produce products that are complementary when producing
them together is more efficient than producing them individually. Suppose that a regional airline
offers regularly scheduled passenger service between midsize city pairs, and that there is modest
local demand for air parcel and small package delivery service. Given current airplane sizes and
configuration s, it is often less costly for a single carrier to provide both passenger and cargo
services in small regional markets than to specialize in one or the other. Regional air carriers
often provide both services.
Studying economies of scope forces management to consider both direct and indirect benefits
associated with individual lines of business. For example, some financial service firms regard
checking accounts and money market mutual funds as loss leaders. When one considers just
the revenues and costs associated with marketing and offering checking services or running a
money market mutual fund, they may just break even or yield only a marginal profit.

The concept offers a useful means for evaluating the potential of current and prospective line of
business. It naturally leads to definition of those areas in which the firm has a comparative
advantage and its greatest profit potential.
ANALYSIS AND DISCUSSION
Economies of scope are important because they permit a firm to translate superior skill in a given
product line into unique advantages in the production of complementary products. Effective
competitive strategy often emphasizes the development or extension of product lines related to a
firms current stars, or areas of recognized strength.
This is most useful technique for the organizations because, nowadays no product is sustain for a
longer time. So organizations cant depend upon a single product, if they make the relevant
product at the same time that will give benefit to the organization.
Today the scenario of business has been changed; people are always thinking to go for the same
brand. This is also leads to economies of scope, for example HORLICS produces Horlics foodles,
biscuits, energy drink. This will help to grasp the attention of the people towards brand.
Because of economies of scope the transportation cost will be reduced.
Through the economies of scope the market value will be increased, for example VIVEL has been
producing bathing soaps and shampoos, they also giving ads like with the purchase of shops the
shampoo are free. So people will attract and sales will be increased through this market value will
increase.
CONCLUSION
The concept of Economies of scope is essential technique for any organization. As per the study I
found that economies of scope of the ITC, HUL and GM are helped them a lot to sustain in the
market and also to become as market leaders. Because of the economies of scope the cost of the
product will reduce, the profits will be maximized. This is the extention concept of economies of
scale for multiple products.

VISION 2015:
To be the preferred financial solutions provider excelling in customer delivery through insight, empowered employees and smart use of techno

Core Values
Customer Centricity

Ethics
Transparency
Teamwork
Ownership

Axis Bank is the third largest private sector bank in India. Axis Bank offers the entire spectrum of financial services to customer segments coverin
Businesses.

The main products of AXIS Bank are Saving Account, Current Account and Demat Account. The
other products are Home loan, personal loan, Insurance, Credit cards, etc.
For better marketing of products, the products are categorized under Axis Bank and Axis Sales.
Products under Axis Bank are
Saving Account

Current Account

Forex Department

Salary Accounts

Products under Axis Sales are


Home loan

Personal loan,

Demat Account
PRICE
The price of the product depends upon the services provided by the Bank on the respective
product to the customers. Detailed pricing changes from time to time and the same can be found
on the website of Axis bank.
PLACE
Place plays an important role in tangibilizing service offerings. Quality of service is perceived by
many customers in the form of place of delivery- locational appeal, interiors, ambience, etc. If a
bank is located in a crowded market the place or location will be a negative tangibilizes.
Providing excellent tangibles in the form of place or location and interiors is particularly
important for appealing to the customers segment. More recently, some of the private banks in
India like AXIS Bank are providing very attractive tangibles in the form of their locations,
exteriors and interiors.

PROMOTION

Promotion can tangibilize services in different forms:


Visualization

Association

Physical representation

Documentation.
Visualization tangibilizes services through hoardings, TV and print campaigns or
advertisements. Physical representation in services has a good promotional appeal to customers
like use of colors to symbolize wealth and status. Service providers use documentation in their
promotions in support of their claims for dependability, popularity and responsiveness

PEOPLE
People are a common factor in every service. And people tangibilize services. Good
people
(means good performance) make good or successful services. Bad performers deliver bad
services.
PROCESS
Customer defined business process- Process innovations and continuous improve-

ment through people involvement.


Result oriented approach- Each process has been designed by first planning the desired
results.

Axis Bank is constantly taking initiatives to offer the best in class service that seek to
enhance customer experience.

PHYSICAL EVIDENCE
Reduce paper usage- Due to technological innovations such as use of Finacle software for
core banking solutions.

It has positioned it self as a bank which gives higher standard of services through
product innovation.

Satisfies the diverse need of individual and corporate clients.

It is customer centric, and service oriented.