teristics appealing to different consumer groups. For example, a car manufacturer will
seek to use the same plant and equipment to produce various models of a particular car,
including estates, hatchbacks, coupés, and cars with or without sunroofs and in different
colours, with a variety of engine sizes. Similarly, a firm producing electric elements for
kettles will seek to use the same equipment to produce elements for deep-fat fryers, etc.
To achieve productive flexibility the firm requires flexible capital that can be adapted to
producing a range of commodities: capital becomes less ‘dedicated’ to a single product.
This may also allow firms to avoid the cost of using capital below capacity since the same
capital may be switched to producing a different product. It should be noted that flexible
production methods also require a flexible, multiskilled workforce and there can be
disadvantages in labour becoming over-specialised in so far as the possession of single
skills might not lend itself to adaptability in production.
When firms achieve flexible production they are said to be benefiting from economies
of scope. The firm now produces a range of output at volume rather than producing a
single type of output at volume. The concept of economies of scale is therefore still relevant
within flexible production