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Many experts believe that once an exchange has reached critical mass...

Many experts believe that once an exchange has reached critical mass, managers of the exchange should ________

(a) work exclusively on driving down transaction costs

(b) work exclusively on growing the exchange to include as many transactions per month as possible

(c) work to expand services for members in a way that reduces a member's total costs

(d) work to expand the exchange horizontally by adding new members in other industries

Please advise answer & why. Thanks!

Solution Preview

The answer C is correct.
The first step is to reach the critical mass
Consider this European illustration.
The critical mass and significant synergies created by a merger will bring lower dealing costs, better prices and unprecedented access to a wide range of international investment opportunities and markets. iX-international exchanges will be Europe's largest equities market and the world's leading derivatives exchange, with the financial strength to develop a substantial information and e-commerce business.
Then the exchages work to expand services with the objective of reducing costs.
The exchanges after achieving critical mass focus on providing services at lowest costs and creating significant benefits for its customers and value for its shareholders .Consider the following example, iX-international exchanges will offer a broad range of services, including trading and information products for equities and derivatives, exchange systems technology and new e-commerce initiatives.
It is important to achieve critical mass at all costs, then the exchanges focus on reducing costs.
The lack of critical mass of suppliers and buyers can merely be considered as a
symptom to the ...

Solution Summary

Here is just a sample of what you'll find in this solution:

"Then the exchages work to expand services with the objective of reducing costs.
The exchanges after achieving critical mass focus on providing services at lowest costs and creating significant benefits for its customers and value for its shareholders."

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