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 scope are they? For those strategies that are not an economy of scope, why aren’t they?
a. The Coca-Cola Corp. replaces its old diet cola drink (Tab) with a new diet cola drink called Diet Coke.
b. Apple Computer introduces an iPod MP3 Player with a larger memory.
c. PepsiCo distributes Lay’s Potato Chips to the same stores where it sells Pepsi.
d. K-Mart extends its licensing arrangement with Martha Stewart for four years.
e. Wal-Mart uses the same distribution system to supply its Wal-Mart stores, its Wal-Mart Super Centers (Wal-Mart stores with grocery stores in them), and its Sam’s Club.
f. Head Ski Company introduces a line of tennis rackets.
g. General Electric borrows money from Bank of America at 3% interest and then makes capital available to its jet engine subsidiary at 8% interest.
h. McDonald’s acquires Boston Market and Chipotle (two restaurants where many customers sit at the restaurant to eat their meals).
i. A venture capital firm invests in a firm in the biotechnology industry and a firm in the entertainment industry.
j. Another venture capital firm invests in two firms in the biotechnology industry.