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Edexcel IAL Economics 3.3.1.2g demergers and stakeholder impacts

Practise explaining why firms demerge and evaluating the effects on businesses, workers and consumers using focused real-world company examples.

Syllabus
First assessment 2019
Course
Economics YEC11
Level
A2

Exam points

  • evaluate demerger benefits with a diagram, weighing focus and efficiency against lost scale
  • apply stakeholder impacts to workers and consumers after a firm separates into smaller units

3.3.1.2g - Demergers: • reasons for demergers • impact of demergers on businesses, workers and question 1

[Maximum number: 1]

In 2022 the pharmaceutical company GlaxoSmithKline (GSK) demerged from the consumer health business Haleon. GSK's shareholders believed that the businesses would be able to work more successfully as separate companies.

Which one of the following is the most likely reason why GSK decided to demerge from Haleon?

A

To benefit from external economies of scale

B

To diversify the business

C

To achieve diseconomies of scale

D

To focus on its core business

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