Which of the following statements is not generally true of a diversification strategy based on the realization of economies of scope?
A) The head office evaluates each business unit as a stand-alone operation.
B) The strategy allows a company to realize cost economies from sharing manufacturing facilities, distribution channels, advertising campaigns, and research and development costs among business units.
C) The strategy may allow a company to use shared resources more intensively, thereby realizing economies of scale.
D) Managers must 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 involves evaluating each business unit in the context of the overall strategy and the synergies that can be created across different units. It is not generally true that the head office evaluates each business unit as a stand-alone operation in this strategy.

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