Question

In order for corporate diversification to be economically valuable

Answer 1

Answer:

C) there must be some valuable economy of scope among the multiple businesses in which a firm is operating and it must be less costly for managers in a firm to realize these economies of scope than for outside equity holders on their own.

Explanation:

Corporate diversification is when a business enters into a market in which it currently does not have operations and also creating a new product for the market.

The 3 types are concentric, horizontal, and conglomerate.

For corporate diversification to be economically valuable there must be an economy of scope the business can benefit from. Also it must be less costly for managers to identify these economics of scope than for outside equity holders to do so.

Answer 2

Answer: (C) there must be some valuable economy of scope among the multiple businesses in which a firm is operating and it must be less costly for managers in a firm to realize these economies of scope than for outside equity holders on their own.

Explanation:

The concept of economy economy of scope opines that the unit cost of producing a product will decline as the variety increases. The earlier the managers of the firm realizes these economies of scope, the better it will be for production and profit maximization for not just the ownership entity but including the outside equity holders