Which of the following statements is NOT generally true of a diversification strategy based on the realization of economies of scope?
A) The strategy requires the head office to evaluate each business unit as a stand-alone operation.
B) The strategy allows a company to realize cost economies among business units.
C) The strategy may allow a company to use shared resources more intensively, thereby realizing economies of scale.
D) The strategy requires managers to be aware of the costs of coordination.
E) The strategy requires close coordination among different business units.

Question

Quizplus · Accepted Answer

A diversification strategy based on the realization of economies of scope typically requires the head office to evaluate each business unit not only as a standalone operation but also in relation to the potential synergies and complementarities that the different units have with one another. Therefore, statement A is not generally true.

Which of the Following Statements Is NOT Generally True of a Diversification