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 acquis ...
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.
Instructions
Select one of the mergers and acquisitions below:
- Sirius XM acquires Pandora.
- The 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:
- What are the synergies that come from the economies of scope?
- What are the synergies that come from the economies of scale?
- How do economies of scope and economies of scale differ within the context of your chosen scenario?
- How are these two concepts different in general?
Note: In your discussion posts for this course, do not rely on Wikipedia, Investopedia, or any similar website as a reference or supporting source.
To earn full credit for your discussion, you must complete one post and one follow-up or reply to a classmate. Make sure both the post and the reply focus on the questions asked.
Solution:
