Economies of Scope advantage refer to using the same core asset to produce or deliver multiple products. It contributes to both quality and cost. For example, the delivery of voice, data, and TV content over the same cable reduces the cost per product. To take this advantage, often innovators develop a family of products.
Upon performing commonality and variation analysis, they develop core assets. Product or application-specific unique features are added around these core assets. For both hardware and software-centric products, leveraging scope advantage plays a vital role.
For example, Apple’s success in using the same operating system core assets in iPod, iPhone, iPad, and iMac has played a vital role in its success. Similarly, Toyota is a good example in hardware products. Due to the lack of scope advantage, many developing countries have been incurring high cost in network-based service delivery.
