Deck 12: Note : Economies of Scope-Synergies and Virtuous Circles

Question 1

Company X produces more than one product at its manufacturing facility,which lowers the firm's overall production costs.This is most likely an example of ________.

A) economies of scale
B) economies of scope
C) market diversification
D) horizontal integration

Answer 1

B

Question 2

________ occurs when two inputs act together and result in an output that is greater than the sum of the two inputs taken separately.

A) Synergy
B) Indemnity
C) Reciprocity
D) Productivity

Answer 2

A

Question 3

How would vertical integration most likely benefit a firm?

A) reducing inventory costs
B) improving customer loyalty
C) enhancing brand awareness
D) facilitating personal selling methods

Answer 3

A

Question 4

Producing a diverse number of products leads to economies of scale,and producing a high volume of products leads to economies of scope.

Question 5

Harvey Industries manufactures and sells fine wood furniture.The company uses the sawdust generated by the production of its furniture products to make particle board.The particle board is then used in the construction of inexpensive furniture that the firm sells in retail stores,such as Walmart.Which term best describes how the firm uses sawdust?

A) horizontal brand extension
B) economies of scale
C) by-product synergy
D) product bundling

Question 6

A firm that uses a diversification strategy to sell a new product that is related to its core business would most likely benefit from ________.

A) economies of scale
B) viral marketing
C) brand recognition
D) price protection

Question 7

Economies of scope exist when a firm saves money by ________.

A) using a resource in multiple activities
B) assessing the customer value chain
C) merging with a smaller firm
D) selling products globally

Question 8

All of the following are methods for multi-business-unit companies to create economies of scope EXCEPT ________.

A) sharing intellectual property
B) selling products to niche markets
C) coordinating market entry strategies
D) pooling negotiating powers for bulk discounts

Question 9

A firm that manufactures ________ would most likely gain an economy of scope.

A) limited quantities of products
B) large numbers of products
C) many different products
D) one type of product

Question 10

A firm can create economies of scope by using one manufacturing facility for a range of products.

Question 11

Economies of scope is a common reason for firms that pursue diversification strategies.

Question 12

What is the difference between economies of scale and economies of scope? How can a firm create economies of scope?