Two divisions of a company decide to use the same manufacturing facilities to capitalize on the organization's excess capacity and to reduce the fixed costs assigned by corporate headquarters.This is an example of which of the following?

Question

Quizplus · Accepted Answer

Synergy is obtained when the value created by two divisions cooperating is greater than the value that would be created if the two divisions operated separately and independently. Two or more of the divisions of a diversified company can utilize the same manufacturing facilities, distribution channels, or advertising campaigns-that is, share functional activities. Each division has to invest fewer resources in a shared functional activity than it would have to invest if it performed the functional activity by itself.

Two Divisions of a Company Decide to Use the Same