Asked by Sewar Rawabdeh on May 02, 2024
Verified
Economies of scope is a common reason for firms that pursue diversification strategies.
Economies of Scope
Cost advantages that enterprises obtain through the diversification of production, by producing multiple products using the same operations or inputs.
Diversification Strategies
Business approaches to entering new markets or industries to reduce reliance on a single market or product line.
- Recognize the advantages of implementing strategies for diversification in a corporate setting.
- Gain insight into the ways companies can achieve cost savings by leveraging economies of scope.
Verified Answer
MS
Maggie Strassburger
May 06, 2024
Final Answer :
True
Explanation :
Economies of scope refer to the cost savings that arise when a firm produces multiple products or services. As a result, firms pursuing diversification strategies can benefit from sharing resources, knowledge, and technology, leading to reduced costs and increased efficiency.
Learning Objectives
- Recognize the advantages of implementing strategies for diversification in a corporate setting.
- Gain insight into the ways companies can achieve cost savings by leveraging economies of scope.
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