What Is the Primary Advantage of Operating Interdependent Subsidiaries

question 2

Multiple Choice

What is the primary advantage of operating interdependent subsidiaries?

• A) It reduces the need to control subsidiaries and to coordinate their activities.
• B) It allows the company to integrate scale-efficient operations and to cross-subsidize subsidiaries when necessary.
• C) It provides an opportunity to balance the interests of subsidiaries with the needs of the headquarters.
• D) It prevents subsidiaries from becoming too independent or uncontrolled.

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Definitions:

Economic Profits

The excess of total revenues over total costs, including both explicit and implicit costs.

Demand Curve

A diagram displaying how the cost of a product is connected to the consumer demand for it.

Cost Functions

A mathematical relationship expressing the cost of production as a function of the quantity of goods produced.

Brand Name

A name owned by a particular firm that distinguishes its products from those of other firms.