Economies of Scope type there are four, namely:

1. Operational Economies of Scope

• Shared Activities, a physical activity are the same used by more than one business function at a diversified company.
• Core Competencies, a non-physical activity was used by more than one business function at a diversified company.

2. Financial Economies of Scope

• Internal Capital Allocation, business functions on a diversified company competing for corporate capital allocated to them.
• Risk Reduction, the risk level of the cash flows of diversified firms is lower than the level of risk of cash flow firms are not diversified.
• Tax Advantages, a diversified company can use losses on some of its businesses to offset profits in some other business, thereby reducing the overall tax liability.

3. Anticompetitive Economies of Scope

• Multipoint Competition occurs when two or more diversified firms simultaneously compete in markets that diverse. Multipoint Competition can lead to the emergence of the Mutual Forbearance means to refrain from competition because the present value of profits that companies compete not greater than the present value of losses suffered by companies that are competing.
• Exploiting Market Power, a company may use part of the monopoly profits of a particular line of business of the company to subsidize the operation of other business lines that were previously less profitable business lines that are subsidized so that it can generate monopoly profits as well.

4. Employee and Stakeholder incentives for Diversification

The employees, especially its managers, trying to increase the size of the company are usually measured in sales value, which also determines the amount of compensation for them. One way is through diversification particularly Corporate Diversification Strategies Not related to the form of mergers and acquisitions.