A firm with strong capabilities in managing synergy is able to create economies of scope using ____.
A) high operational relatedness and low corporate relatedness
B) low operational relatedness and high corporate relatedness.
C) high operational relatedness and high corporate relatedness
D) low operational relatedness and high corporate relatedness

Question

Quizplus · Accepted Answer

A firm with strong capabilities in managing synergy would want to create economies of scope, which is achieved through high operational relatedness and high corporate relatedness. High operational relatedness means that the firm's different business units share similar processes or technologies, which increases efficiency and reduces costs. High corporate relatedness means that the firm's different business units are related in terms of their strategic goals, which allows for coordination and collaboration between units. Together, high operational and corporate relatedness allow for the firm to create synergy, where the combined value of the different units is greater than the sum of their individual values.

A Firm with Strong Capabilities in Managing Synergy Is Able