In 2024, the diversified conglomerate Aether Group completed a demerger, splitting its luxury hospitality division, Aether Resorts, from its heavy machinery manufacturing unit, Aether Industrial.
Which of the following is the most likely strategic benefit of this corporate restructuring?
To achieve greater vertical backward integration by securing a captive supply chain for the heavy machinery unit.
To reduce managerial diseconomies of scale and allow each business to focus on its specific core competencies.
To benefit from increased purchasing economies of scale through unified bulk procurement across both divisions.
To lower barriers to entry in both markets to encourage new market entrants.
3 exam-style questions on Edexcel A A Level Economics 3.1.3 Demergers. Each one has a worked solution and a mark scheme showing where the marks go.