Economies of Scope and the Modern Technology Report

Introduction: Economies of Scope as an Object of the Research

The role of economics of scope has increased considerably since recently, which presupposes that the changes occurred in the given sphere should be considered closer and analyzed to understand the methods that enhanced the growing development of the given economics.

Therefore, the elements that economies of scope are comprised of, as well as the effects that the recent surge of technological development, as well as the numerous technological innovations, had on the given entrepreneurship is of major importance.

It is necessary to mark that the phenomenon of economics of scope must not be confused with the one of the economies of scale. Since the two phenomena concern the same sphere yet are composed of different elements, it is required to draw the line between the two.

According to the description provided by Parkin, Powell and Matthew (2007), “a firm experiences economics of scale when an increase in its output of a good or service brings a decrease in the average total cost of producing it” (227).

However, the authors mark that both the economics of scale and of scope “can lead to natural monopoly” (Parkin, Powell and Matthew 2007, p.227).

It is worth marking that Parkin, Powell and Matthew (2007) emphasize the importance of technological innovations for the economies of scale: “In a period of rapid and far-reaching technological change, such as that of the information revolution of the 1990ies, firms become extremely optimistic about profits and investment booms (p.546).”

Hence, the recent changes in the sphere of economies of scale are to be observed.

The Existing Companies: The Opportunities and Examples

In the given paper, such economics of scope are considered as the Xerox Company, the U.S. Telecommunications Industry, as well as the local exchange company and local operating company are considered.

With the help of the analysis of their peculiarities and development, one can come to the conclusion concerning the companies’ strategic operations, their tactics and the way the given economies have utilized the new technologies that were at their disposal.

However, it is important to mark the opportunities that each company had before the implementation of the technological changes.

It is worth marking that Xerox Co. is one of the businesses that is developing rapidly and, hence, requires expanding, creating affiliates and managing them successfully.

Speaking of the other sphere of economies of scope that are considered in the given paper, the one concerning the telecommunication issues, it is necessary to explain that in the given sphere, “the existence of economies of scope remains an important but ambiguous issue” (Banker et al 1998, p.254).

Therefore, differences in the development of the given companies predetermine the complexity of the analysis, making the latter considerably objective, though.

Tracking the Progress: The Role of the Technologies

It is worth mentioning that in the companies under the considerations, the technological, innovations introduced have played quite different roles despite such common feature as the fact that the companies in question both belong to the economies of scope and, hence, are supposed to develop according to a certain pattern.

Nevertheless, it is worth mentioning that in the sphere of the U.S. telecommunications, the economies of scope are closely interconnected with the rapid progress of the U.S. telecommunications, yet there is no tangible connection between the two; as the authors claim, the given elements impact the same sphere of financial issues, yet the connection between the two is quite vague: “Moreover,… the evidence cannot adequately disentangle the effects of two factors that both reduce unit costs – economies of scale and technological advance” (p.256).

In contrast to the given phenomenon, the economy of scale that Xerox Co. represents offers rather substantial reasons for implementing the strategy that economy of scale presupposes.

Grounding their ideas and suggestions on the current state of the company’s affairs, the managers come to the conclusion that the technological innovations that have been implemented so far require the change of the company course of n economy of scope, marking that the old model of operating the company does not suit the innovations in the sphere of technologies: “In other cases, though, such a business model will not fit the circumstances of the technological or market opportunity” (p.2).

Concerning the Course of Actions: Strategic Implications

Analyzing the specific strategies that the given economies of scope utilize to achieve the maximum efficiency and decrease the costs that they suffer, one must mark that each of the given entrepreneurships has chosen it sown pace and model of development, which calls for another comparison on the efficiency of the given approaches.

Nevertheless, it is necessary to comment on the strategic implications themselves first.

Observing the specifics of the strategic implications that the economies of scale presuppose for the given companies, one can come to the conclusion that with the help of the strategies chosen by the companies, a rapid increase in the revenues is about to occur.

Because of the improvement of the technological issues, the companies in question are able to process the queries and complete the tasks several times faster; in addition, the surge of the income and the decrease of the raw materials used for the production of the goods of the given companies allows the latter to develop further, thus, creating sufficient grounds for the future expansion, the international partnership and even the “evolution of future industry structure”(Banker et al 1998, p.254).

The Related Concepts: Discussing the Commercial Integrity

Obviously, the issue of economies of scope and the technological innovations tat trigger the latter cannot be considered alone, since there is a number of factors dependent on the aforementioned economies, and, vice versa, the given corporations depend considerably on the issues intertwined with the problem of providing innovations in the sphere of economic and business.

Crating the specific environment for the development of the given ventures, one can claim with certainty that the success of the entrepreneurship follows immediately, which means that the elements of the environment that the companies in question operate in must be considered thoroughly.

Introducing the peculiar details, one will be able to see the related concepts that contribute to building a successful business. Among the concepts of the kind, the commercial integrity takes the first place.

As Chesbrough and Rosembloom (2002) say, “some scholars conclude that firms may indeed develop the ability to manage new technological opportunities effectively if they invest in integrative capabilities…, ambidextrous internal processes…, or complementary assets” (p.5), hence, emphasizing the necessity to create the commercial integrity of the economies in question.

Hence, the integrity of the U.S. telecommunication companies cannot be doubted at the moment, which obviously leads to the prosperity of the latter, whereas Xerox Corporation seems to have problems concerning the integrity of the company (Banker et al 1998), which triggers certain concerns for the company future. Hence, the integrity of the economies of scope is essential for the well-being of the latter.

Conclusions: Economies of Scope: The Importance of Technologies Development

Judging from the research conducted and the data obtained, one can come to the conclusion that in most cases, the transition to the development of economies of scope is predetermined by the necessity to implement certain technological changes and offer various innovations into the company.

Therefore, the transition to the strategies of economies of scope can be considered a natural course of events for major companies like Xerox or the U.S. Telecommunications.

With the help of the strategies that the acceptance of the economies of scope presupposes, Xerox and the U.S. Telecommunications can develop into larger corporations, keeping their integrity and creating the environment auspicious for further improvements and progress.

Executive Summary

In the modern world of economics, the aspect of technological innovations plays one of the major roles. Providing an efficient operation of companies, facilitating the work of the employees and simplifying the working process in general and certain operations in particular, the technological aspect is one of the prior issues in the sphere of economies of scope.

Hence, the scale of the recent technological innovations, as well as their impact on the modern economies of scope, is to be considered. In addition, the general features of the modern examples of economies of scope are to be observed as well.

Narrowing the research to featuring the peculiarities of several entrepreneurships, the strategies chosen by them, the tactics the businesses in question implement and the goals that they pursue, as well as analyzing the commercial integrity within the companies in question, one can come to certain conclusions concerning the methods in which the modern economies of scope are operated and the issues that arise on certain stages of the development of the given economies.

Hence, the general assessment of the current situation in the sphere of economies of scope can be conducted.

With the help of the specific methods of research, precise data can be obtained, a thorough analysis can be conducted, and cohesive conclusions can be made.

In the given paper, several companies that represent the economies of scope and utilize the correspondent elements their corporation strategy are going to be considered, their recent technological innovations are going to be enumerated, and the changes that have occurred in the given companies are going to be analyzed.

It is important to mark that the given research focuses on the technological innovations used in the process of operating the economies of scope, and argues that for the economies of scope, the recent technological innovations can be considered as an efficient means of tackling certain entrepreneurship issues, namely, the ones concerning the efficiency of the company, the quality of the products and the efficiency of the staff.

Therefore, the given paper claims that the current technologies are to be incorporated for an efficient implementation of the strategies of the economies of scope.

In addition, the issues concerning the technological sphere are to be considered in the paper. Moreover, the social complexities are to be taken into account. Conducting an extensive observation of the given entrepreneurships, the paper offers profound conclusions.

Bibliography

Banker, D.R., Chang, H.-H., and Majumdar, S.K. 1998, “Economies of Scope in the U.S. Telecommunications History”, Information, Economics and Policy, vol.10, pp.253-272.

Chesbrough, H., and Rosembloom, R.S. 2002, The Role of Business Model in Capturing Value from Information: Evidence from Xerox Corporation’s Technology Spinoff Companies, Harvard Business School, Boston, MA.

Parkin, M., Powell, M., and Matthews, K. 2007, Economics, Pearson Education, Upper Saddle River, NJ.