In a Diversified Company,a Business Subsidiary Has More Competitive Advantage

question 116

Multiple Choice

In a diversified company,a business subsidiary has more competitive advantage potential when

• A) it is a cash cow.
• B) it has value chain relationships with other business subsidiaries that present competitively valuable opportunities to transfer skills or technology or intellectual capital from one business to another, combine the performance of related activities and reduce costs, share use of a well-respected brand name, or collaborate to create new competitive capabilities.
• C) it is the company's biggest profit producer or is capable of becoming the biggest.
• D) it is in a fast-growing industry.
• E) it operates in an industry where competition is less intense and driving forces are relatively weak.

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Definitions:

Marginal Revenue

The enhanced income from disposing of one more unit of a product or service.

Perfect Price Discrimination

The practice of charging each customer the maximum they would be willing to pay for a good or service, capturing all consumer surplus.

Willingness To Pay

The maximum amount an individual is prepared to spend on a good or service, reflecting the value they assign to it.

Entry Barriers

Factors that prevent or hinder the ability of a new firm to enter and compete in an industry.