6.4.3 Strategic Economies
Strategic economies encompass scale economies (as ‘plant’ size expands,
average cost decreases – a long term phenomenon, where firms have time
to expand plant size), focus and specialization, and economies of scope. The
latter refers to a situation where “a company can [spread out] resources
and management talents across a [wide range] of opportunities” (Hax and
Wilde, 2001) such that it gives the company an efficiency advantage over
companies that cannot.