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Which of the Following Describes When Diversification to Obtain Economies

Question 32

Multiple Choice

Which of the following describes when diversification to obtain economies of scope is possible?


A) When there are significant commonalities between one or more value-chain functions in a company's different business units or divisions that result in synergies which increase profitability.
B) The sharing of competencies will result in increased costs which will cause a streamlining of one or more of a company's new or existing business units.
C) When the advantages of sharing competencies will exceed the costs and risks created.
D) Product bundling allows a company to satisfy customers' needs for a complete package of related products but makes it more difficult to achieve economies of scope.
E) When the costs of coordination necessary to achieve synergies within a company are higher than the value that can be created by such a strategy.

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