The Statement: "Economies of Scope in Shared Resources Do Not

question 7

Multiple Choice

The statement: "Economies of scope in shared resources do not provide a sufficient justification for diversification" is:

• A)Correct: Cost savings form shared resources are of little value unless there are also organizational capabilities that can be transferred between the businesses
• B)Correct: to justify diversification economies of scope need to be supported by transactions costs in the market for the particular resources
• C)Incorrect: economies of scope are sufficient grounds for diversification on their own
• D)Incorrect: the benefits from economies of scope need to exceed the administrative costs of the corporate HQ.

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Definitions:

Hybridization

A concept in chemistry that describes the mixing of atomic orbitals to form new hybrid orbitals that can accommodate the pairing of electrons to form bonds.

Central Carbon

The carbon atom in an organic molecule that is bonded to four different groups, making it a chiral or stereo center.

Heat Of Hydrogenation

The heat released during the hydrogenation process, which involves adding hydrogen to an organic compound, typically to convert unsaturated bonds to saturated ones.

Compound

A concoction formed through the chemical union of two or more elements in determined proportions.