To the extent that a firm exploits real economies of scope in implementing a diversification strategy, it will be able to unambiguously evaluate the performance of individual divisions in that firm.

Question

Quizplus · Accepted Answer

This statement is false. Real economies of scope refer to the cost savings and benefits a company achieves by operating in multiple markets or producing multiple products. Evaluating the performance of individual divisions in such a scenario may be difficult as the benefits and costs are shared across the firm. Therefore, it may not be unambiguous to evaluate the performance of individual divisions in a diversified firm.

To the Extent That a Firm Exploits Real Economies of Scope