Sharing Core Competencies Is One of the Primary Potential Advantages

question 72

Multiple Choice

Sharing core competencies is one of the primary potential advantages of diversification. In order for diversification to be most successful, it is important that the

• A)products use similar distribution channels.
• B)similarity required for sharing core competencies must be in the value chain.
• C)target market is the same, even if the products are very different.
• D)methods of production are the same.

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Definitions:

Variable Costs

These vary with output. When output rises, variable costs rise; when output declines, variable costs fall.

Break-Even Points

The production level or point in sales at which total revenues equal total expenses, resulting in neither profit nor loss.

Shutdown Point

The level of operations where a company's revenue from goods or services sold just covers its variable costs, beyond which it becomes more cost-effective to halt production.

Short Run

A period in which at least one input, such as plant size or capital, is fixed and cannot be varied to change output levels.