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

The statement "The strategy requires the head office to evaluate each business unit as a stand-alone operation" is not generally true of a diversification strategy based on the realization of economies of scope. In fact, the strategy focuses on leveraging synergies among business units to create value, rather than evaluating them as stand-alone operations. The other statements are generally true of such a strategy.

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