LSM 815

Scale, scope & specialisation
• Economies of scale – explain why companies
outsource activities that would otherwise be
retained as a core competency.
• Economies of scope – Cost reduction that can be
achieved as additional products are handled
d
through a single facility.
• Specialisation – is important t reason for
outsourcing, to gain experience and learns how to
make its operations efficient, it gain advantage
through its expertise and time advantage over
potential competition.