List and Explain Why a Company Would Create Subsidiaries Instead

question 42

Essay

List and explain why a company would create subsidiaries instead of integrating the smaller companies into the larger parent to create a single entity.

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Definitions:

Comparative Advantage

The ability of an individual or country to produce a good or service at a lower opportunity cost than others.

Production Possibilities

A curve representing all possible combinations of two goods that can be produced within a given economy when resources are fully and efficiently utilized.

Specializes

Specialization involves focusing on a narrow area of knowledge or skill, often to improve efficiency or performance.