The only economy of scope that an unrelated firm can try to realize is
A) core competencies.
B) tax advantages.
C) multipoint competition.
D) risk reduction.

Question

Quizplus · Accepted Answer

The only economy of scope that an unrelated firm can try to realize is risk reduction. This means that by diversifying their operations into different industries, the firm can reduce its overall risk of failure. This is because if one part of the firm is struggling, the other parts can compensate for the loss, resulting in a more stable overall business. Core competencies, tax advantages, and multipoint competition all relate to related diversification, which involves expanding into related industries to share resources and capabilities.

The Only Economy of Scope That an Unrelated Firm Can