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THE CASE

“MJ Enterprise” is a private limited company established in 2001 and started its business by producing televisions. After five years of manufacturing, company manager decided to produce more products rather than to specialize in one product. So in 2005 the company started to manufacture other home appliances like split air conditioners, microwave oven as well and involved in joint production.

 

REQUIREMENT

 

Keeping in view the above scenario, identify which concept of economics has been applied to “MJ Enterprise”? Also explain briefly the advantages for the company “MJ Enterprises” after involving in joint production?

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ECO402 GDB Solution 

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The concept of economies of scope of economics has been applied to “MJ Enterprise” because economies of scope is a cost advantageous for the organizations. The cost advantageous is arisen when the firms produce number of products rather than one product.
Advantages of Economies of Scope for MJ Enterprises after Involving in Joint Production.
Economies of scope reduce the cost of production for the MJ Enterprises.
Economies of scope stagnant the sale of the MJ Enterprises.
It provide the opportunities of sharing/ joint utilization of input resources for the MJ Enterprises.
Economies of scope will enable the MJ Enterprise to respond to the varying consumer penchants and product life cycle.
Computer Aided Manufacturing and Automation will enable the MJ Enterprises to produce the number of products with variations.
The number of products will diversify the risk of the MJ Enterprises.
The MJ Enterprises can adopt the international or regional variations.

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