In strategic management, what term describes a method of reducing costs by sharing resources across multiple products or services?

The correct term that describes a method of reducing costs by sharing resources across multiple products or services is economies of scope. This concept focuses on the efficiencies gained by a company when it produces multiple products or services together instead of separately. By utilizing shared resources, such as technology, production facilities, or marketing efforts, an organization can lower its overall costs.

For instance, a company that manufactures both laptops and desktops can use the same production line for components, thus gaining cost efficiencies. Economies of scope highlight how diversification in products can lead to a reduction in average total costs, unlike economies of scale, which pertain to cost advantages gained by producing a higher volume of a single product. Both concepts are related to cost savings, but economies of scope specifically emphasizes the benefits of resource sharing across different product lines.