Which of the Following Describes When Diversification to Obtain Economies

question 53

Multiple Choice

Which of the following describes when diversification to obtain economies of scope is possible?

• A) When there are significant commonalities between one or more value-chain functions in a company's different business units or divisions that result in synergies which increase profitability.
• B) The sharing of competencies will result in increased costs which will cause a streamlining of one or more of a company's new or existing business units.
• C) When the advantages of sharing competencies will exceed the costs and risks created.
• D) Product bundling allows a company to satisfy customers' needs for a complete package of related products but makes it more difficult to achieve economies of scope.
• E) When the costs of coordination necessary to achieve synergies within a company are higher than the value that can be created by such a strategy.

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