One source of growth is external growth from a merger or acquisition. Often mergers or acquisitions are justified on the basis of the expected benefits from “synergies” created by the merger or acquisition. Economists know these as economies of scale and economies of scope.
The focus of this discussion will be on defining economies of scale and economies of scope, as well as the key differences between the two within the context of a hypothetical scenario of your choice.
Select one of the mergers and acquisitions below:
Sirius XM acquires Pandora.The yet to be concluded merger of Sprint, T-Mobile, and Metro PCS.The merger of Strayer University and Capella University.The Renault–Nissan–Mitsubishi Alliance.
For your chosen scenario, address the following in your discussion post:
How are the concepts of economies of scope and economies of scale different? How do they differ within the context of your chosen scenario? What are the synergies that come from the economies of scope? What are the synergies that come from the economies of scale?