Question 3

Mars is a company famous for M&M chocolates and Skittles candy. Recently, Mars paid around $7.7 billion to purchase VCA Inc (a veterinary and dog day-care company). The addition of VCA allows Mars to gain a wide network of animal hospitals, veterinary labs and clinics. Mars aiming for its foothold in the pet care business would help to generate an extra stream of revenue growth. (1) Explain the type of diversification being pursued by Mars. (2) How do economies of scope work at Mars in this situation? (5 points).