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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Definitions:

Strategic Goals

Long-term, overarching objectives that an organization aims to achieve, guiding its mission and the allocation of its resources.

Investment Revenue

Income earned from various forms of investments like stocks, bonds, mutual funds, and other investment vehicles.

Premiums And Discounts

Terms related to the bond market; premiums occur when a bond's price is higher than its face value, and discounts when it's sold below face value, affecting its yield.

Bond Investments

Financial securities that represent a loan made by an investor to a borrower, typically corporate or governmental, that pays periodic interest payments and the return of principal at maturity.