A firm implementing a diversification strategy has just acquired what it claims is a strategically related target firm but announces that it is not going to change this recently acquired firm in any way. Will this type of diversifying acquisition enable the firm to realize any valuable economies of scope that could not be duplicated by outside investors on their own? Why or why not?
Answer to relevant QuestionsOne of the reasons why internal capital markets may be more efficient than external capital markets is that firms may not want to reveal full information about their sources of competitive advantage to external capital ...Consider the following list of strategies. In your view, which are examples of potential economies of scope underlying a corporate diversification strategy? For those strategies that are an economy of scope, which economy of ...Suppose that the optimal transfer price between one business and all other business activities in a firm is the market price. What does this condition say about whether this firm should own this business?How can one tell whether two firms are engaging in an alliance to facilitate collusion or are engaging in an alliance for other purposes?What are the strengths and weaknesses of increased leverage as a response to free cash flow problems in a firm?
Post your question