Question5: Despite the competition, internal economies of scale and external economies of scale as well as economies of scope is the secret behind Coca Cola success.

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Question 5                                                                                                                  (11 marks)

“Despite the competition, internal economies of scale and external economies of scale as well as economies of scope is the secret behind Coca Cola success”. Assume a world of two nations. Also, assume Mexico exports Coca Cola to USA. Answer the questions that follow.

  1. Examine the source of internal economies of scale and external economies of scale that have facilitated Coca Cola to overcome the intense competition from a diversity of soft drinks across the world.                4 marks
  2. In 2019 data indicated that Mexico was the highest consumer of Coca Cola in the world with a total consumption of  634 8-ounce cups followed by USA that consumed 403 despite being the headquarters of Coca Cola. Use the diagram below to answer the questions that follow.
  3. Name and explain what you understand by curves A and B. 2 marks
  4. Explain the role of external economies of scale in faciliting cross border trade between Mexico and USA.                                                                                                                                                5 marks

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