Q1. Economists argue about the potential benefits and cost of diversification. For example while diversification can certainly help company to promote new products at the same time through the merger of two firms it can be more expansive to develop communication, information and operating system. Prove that under certain circumstances diversification can still create a real value?
Q2. In accordance with economic theory, the individuals are always trying to maximize their own utilities. Thus far the owners are likely to be interested in maximization their own profits, while the managers and other workers do not share this goal necessarily. Discuss the sources of conflicts between the owners and the managers of the firms?