Economies of Scope

Many of us would have read and understood the importance and benefits of economies scale (are factors that cause the average cost of producing something to fall as the volume of its output increases.). 

Economies of scope, as it is rightly called as the first cousin to economies of scale 'is a factor that make it cheaper to produce a range of products together than to produce each one of them on its own.' This could be understood better when two centralised functional dept i.e., finance and marketing are involved or any other interdisciplinary departments. For example: The IDBI Bank and its wholly owned subsidiary IDBI Capital can use their sales teams to cross-sell their individual  financial products to their existing customers. Bancasuurance, for instance, is based on the logic where a bank can sell a financial (insurance) product to their existing/new account holders.

Now, we can also think on why many companies moved from core competancy to convergence strategy. ITC, for instance, cigratte manufacurer to textile to biscuits etc,. One of the cause would be presence of economies of scope. However, all the theories has its own issues and challenges.

Excerpts: " The Economist Guide to Management Ideas and Gurus", by Tim Hindle.

Impact of rupee depreciation on total bank credit

When ` depreciates with US$, the import would be costly. The importer would ask for payment through US$. So the importer would go for bank credit and tells payment has to be done in US$. The bank should have good foreign reserves for the payment. Otherwise, RBI would supply. But when more ` is required to pay one US$, Banks would find shortage of `. Because to have more US$ for payment to importer banks would have paid much more `. So, this would lead to credit crunch and liquidity position (run out of cash). Quantity of  ` would come down as more US$ or foreign reserve would be lying. It would affect the credit flow and impacts the credit availability for working capital and fixed investment requirements by the industry. Hence, banks hands are tied and industries won't have easy accessiblity to loan funds.

Thus, the  ` depreciation has been feeding into core inflation, delaying the adjustment of inflation to slower growth. And also, RBI's monetary policy stance on 'to maintain an interest rate environment to contain inflation and anchor inflation expectations'.

Great minds think alike -

Dr.N A Palkhivala says in "We, The People" -
Indians - Tradition of being collectively foolish despite being individually intelligent.
Dr.V Raghunathan says in "Games Indians Play" -
Indianness - Being privately smart and publicly dumb

A B C - h i

Well, probably the letters A B C are the most used letters by any child on this world and in particular in India. I have come across many parents or family members forcing their children to recite A B C.....etc. You might be amazed, why this person writing on this. The reason is, my view of interpreting these letters are completely different.

A - Attitude, where it reflects one's action or mental state. B -Behavior, where it reflects one's action or reaction for something. C - Character, where it reflects one's distinctive nature to an individual. Every body should have a positive approach in getting these letters as their Capital to themselves. So, I have sculpted these letters in capital. And the other two letter i.e' h and i' in small, because now a days, one hundred per cent honesty and integrity does not work at all. You should be honest and show integrity in whatever you are dealing with. However in my experience, showing true honest and integrity will never help an individual to reach the top and stand tall. Only by experience I have come to know, there is something called just honest and true honest (integrity as well). We the people have given a meaning to honesty and over a period of time we are mixing so many things with the original meaning.

Finally, you should have A, B and C as capital and h and i as liability. Unfortunately we end up with having no assets. Isn't it hilarious question to be asked by ourselves?