Composite effect

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Under the composite effect ( English scope economies of ; and composite advantage or composite yield ) is in the business administration of single to multiple qualitative impact products -related activities on the cost functions of market participants understood.

General

This means, for example, that despite increasing product diversity, synergies and cost advantages can be realized through a composite effect . The effect is named after a group of companies in which the effect occurs through the cooperation of several independent companies. Combined effects can also be described as more efficient production through the joint production of different products and the multiple use of resources . Economies of scope exist when two or more products can be produced together at lower costs than separately. The term also includes efficiency benefits by increasing the range of services or vertical integration .

Using a practical example, the composite effect can be explained as follows: If a company produces butter, it probably has a cost advantage in the production of low-fat milk. The composite effect can therefore already occur in joint production.

species

A distinction is made between two types of composite effects, the bundling effect and the concatenation effect, which can each be of a factual, spatial or temporal nature.

Bundling effect

By bundling effect occurs when a horizontal bundling of the product segments is. This therefore corresponds to an increase in the range of services. A distinction can be made between:

Factual
Bundling effect: bundling is advantageous due to the factual properties of activities. This is the case , for example, in joint production . Unwanted by-products can actually be used as starting materials in another production process. Other examples are improved machine utilization through additional production of other products on the same machine or a fixed cost degression in research for products with related technology. Bundling effects can also occur in newspaper and magazine companies if articles that have been created or paid for are used for several titles that have been produced separately.
Spatial
Bundling effect: bundling is advantageous due to the spatial proximity of activities. This is the case, for example, with call centers that offer a telephone hotline for various companies. Another example could be the sharing of power and telephone lines or the joint transportation of passengers and cargo.
In order to differentiate between these different types of spatial bundling effects, a scheme can be created according to which they are characterized on the one hand according to their mobility and on the other hand according to their proximity to the customer. The call center is stationary and remote from the customer, the shared line is also stationary but close to the customer, and joint transport is mobile and also close to the customer.
Temporal
Bundling effect: bundling is beneficial by performing activities at the same time. This is the case, for example, when purchasing a mobile phone including a mobile phone contract. Here two products are sold at the same time, thus saving distribution costs.

Chaining effect

Of chaining effect occurs when a vertical concatenation occurs of the value chain. This therefore corresponds to an increase in the vertical range of manufacture. A distinction can be made here between factual , spatial and temporal concatenation effects.

Requirements for composite effects

Common resources (manufacturing facilities, technologies, sales channels, research departments, etc.) can be used to produce the individual products. If, as a result, the total costs of producing a product range (i.e. product range) are lower than the sum of the production costs of the individual products if they are manufactured separately, this is referred to as a positive composite effect. This can mainly be attributed to input factors that cannot be divided at will (especially in relation to public goods / resources such as patents). Combined effects and the resulting synergies are often cited as the reason for company mergers, but in many cases, if at all, they only exist to a limited extent.

Risks

The possibilities of achieving cost savings is the risk of diseconomies ( English diseconomies of scope ), for example due to possible increases transaction costs of large enterprises , opposite.

See also

literature

  • Bernd W. Wirtz: Media and Internet Management . 6th edition. Wiesbaden 2009.

Individual evidence

  1. ^ Anton Frantzke, Fundamentals of Economics. Microeconomic theory and tasks of the state in the market economy , Schäffer-Poeschel, Stuttgart, 1999, p. 356
  2. ^ Cary L. Cooper / Chris Argyris (eds.), The Concise Blackwell Encyclopedia of Management , Blackwell, 1998, p. 188
  3. ↑ Hans-Dietrich Haasis, Production and Logistics Management. Planning and design of value creation processes , Gabler, 2008, p. 93
  4. ↑ Hagen Lindstädt / Richard Hauser, Strategic Areas of Effect of the Company , Gabler, 2004, p. 41 ff.