Question

Report about the Rise and the Fall Nokia:(case study)

What are the opportunities for Economies of Scale and Economies of Scope for NOKIA during the RISE AND THE FALL of this company? Explain

Answer 1

Economies of scale can be defined as a proportionate saving as reduction in cost with high volume of output or higher proportionate increase in output with same cost.

Economies of scope can be defined as the reduction in cost due to the production of two or more distinct goods at same place instead of producing it seperately.

The Economies of scale worked well for the Nokia at the time of the rise as at the early stages there was hardly any competition available for Nokia due to which the market demand was meet by Nokia. The production was done at higher scale leading to lower cost of production. As other companies enter the market, the market size for Nokia decreases and the demand fall leading to lower production that resulted in increasing ineffeciency.

The economies of scope was used by Nokia as it produced sims and mobile phones and made infreastructure available for usage of the network. The major production unit for Nokia products remained in Finland but with time they have expanded their business in other part of world leading to fall of the economies of scope.