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Definition of 'Scope'

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In finance, scope refers to the breadth of a company's operations. A company with a wide scope operates in many different industries or markets, while a company with a narrow scope operates in only a few. Scope can be measured by the number of products or services a company offers, the number of countries in which it operates, or the total revenue it generates.

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Scope is an important factor to consider when evaluating a company's investment potential. A company with a wide scope may be more diversified and less risky than a company with a narrow scope. However, a company with a wide scope may also be more difficult to manage and less profitable than a company with a narrow scope.

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The scope of a company can change over time. A company may expand its scope by entering new markets or industries, or it may contract its scope by exiting markets or industries. The decision to change a company's scope is often based on a number of factors, including the company's strategic goals, its financial resources, and the competitive landscape.

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Scope is a complex concept that can have a significant impact on a company's performance. Managers should carefully consider the implications of changing a company's scope before making any decisions.

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