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What are the sources of economies of scale for Proctor and Gamble?

What are the sources of economies of scale for Proctor and Gamble?

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Soln. Economies of scale is the benefit that a firm leverages by expanding its scale of production in long run.Sources of economies of scale for Proctor and Gamble are -

1. Leveraging the scale from diversified business portfolio. Like purchasing pools created by household businesses are being leveraged by health and beauty products.

2. Advertising budget of one business portfolio is being leveraged by other business unit.

3. Science and technology of one business unit gives scaling advantage to other business unit.

4. Large market and expanded business helps in reducing the cost per unit of production.

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