Economies of scope: the cost savings developed by a
group when it shares activities or transfers capabilities and competencies from
one part of the group to another
– for example, a biotechnology sales team sells more than one product from the total range.
– for example, a biotechnology sales team sells more than one product from the total range.
Economies of scale: The extra cost savings that occur
when higher volume production allows unit costs to be reduced – for example, an
Arcelor Mittal steel mill that delivers lower steel costs per unit as the size
of the mill is increased.
Global brand
recognition:
the benefit that derives from having a brand that is recognized throughout the
world – for example, Disney..
Global customer
satisfaction: multinational
customers who demand the same product, service and quality at various locations
around the world – for example, customers of the Sheraton Hotel chain expect
and receive the same level of service at all its hotels around the world.
Lowest labour and
other input costs: these arise by choosing and switching manufacturers
with low(er) labour costs – for example, computer assembly from imported parts
in Thailand and Malaysia where labour wages are lower than in countries making
some sophisticated computer parts (such as high-end computer chips) in
countries like the USA
Recovery of research
and development (R&D) costs and other development costs across the maximum
number of countries – new models, new drugs and other forms of research often
amounting to billions of US dollars. The more countries of the world where the
goods can be sold means the greater number of countries that can contribute to
such costs. For example, the Airbus Jumbo A380 launched in 2008 where
development costs have exceeded US$ 10 billion.
Emergence of new
markets:
means greater sales from essentially the same products.
