Economies of scope exist if the firm reduces costs by increasing the variety of activities it performs.  Whereas economies of scale are usually defined in terms of declining average cost functions, it is more customary to define economies of scope in terms of the relative total cost of producing a variety of goods together in one firm versus separately in two or more firms.  Economies of scope may be achieved by leveraging core competencies.  For example, it may make economic sense for a manufacturer of tape to get to the business of manufacturing not pads with adhesive backings as there are commonalties in the two businesses as many points along the value chain.