About Economics of scale and econonmics of scope

They are very similar in both the words just 2-letters differences and also relating to operating efficiency and effectiveness of a company

Economies of Scale are defined as the unit-cost reductions associated with a large scale of output. It is the ability to spread fixed costs over large production volume. The costs include the purchase of machinery, the cost machine setting up, advertising, and R&D.
For examples, in aviation industry, a full loaded aircraft could realize the economies of scale; Publishing industry, more books or newspapers published can reduce costs substantially.

Other examples as required:
For a) Oil Refining, the cost can be reduced when fully utilizing the refinery facility for oil refining, pipes and vessels for large batch distribution and transportation.
For b) Banking, the cost per transaction of ATM and computer system operation can be reduced since the cost of equipment and facilities will be almost the same in handling small and big money.


Economies of Scope are defined as the sharing of resources such as the costs of R&D, manufacturing facilities, distribution channels, advertising campaigns by two or more business units that gives rise to economies of scope, which have the benefits derived when more than one business units in the company can use the operations of a component of the value chain.
For example Kao Japan can use its value chain of lubrication technology can produce two entirely different products: the FMCG product-- skincare, body lotion and shampoo, and the product of computer appliances- magnetic disks.

Other examples as required:
For a) Oil Refining, crude oil could also be refined into different sub-products like rubber tires, plastic films, paraffin, polyester, polyamide (nylon), and many other polymers for different purpose like Corian, paints, drugs & pharmaceuticals, all are other than energy industry, so the business scope could be enlarged economically
For b) Banking, besides of basic banking business, now most of banks would involve in monetary related businesses such as insurance, investments, securities buying and selling with their existing facilities and manpower through staff training processes