Discussion

One source of growth is external growth from a merger.  Other mergers or acquisition are justified on the basis of the expected benefits from "synergies" created by the merger or acquisition.  Economists know these as economies of scale and economies of scope.  The focus of this discussion will be defining economies of scale and economies of scope, as well as the key difference between the two within the context of a hypothetical scenario of your choice.

Select one of the mergers and acquisitions below:

Sirius XM acquires Pandora.

The merger of Sprint, T-Mobile and Metro PCS.

The Renault-Nissan-Mitsubishi Alliance.

For your choice scenario, address the following in your discussion post.

- What are the synergies that come from the economies of scope?

- What are the synergies that come from the economies of scale?

- How do economies of scope and economies of scale differ within the context of your chosen scenario?

- How are these two concepts different in general?