Final answer:
The statement is true; while economies of scale and large advertising budgets are still effective, they must be accompanied by strategic flexibility due to increased globalization and technological advances.
Step-by-step explanation:
The statement that economies of scale and large advertising budgets remain effective but must be reinforced by strategic flexibility is true. In the new competitive landscape, firms face heightened competition due to globalization and advances in communications and information technology.
Despite this, large advertising budgets can still serve as barriers to entry, as seen with dominant companies like Coca-Cola and Pepsi, whose promotional spending can be prohibitive for new entrants attempting to establish a new national brand.
However, the focus on strategic flexibility is crucial. With rapidly changing market conditions and consumer preferences, companies must be able to adapt quickly.
Thus, while economies of scale and advertising might provide an initial competitive advantage, long-term success increasingly depends on a firm's ability to remain agile and responsive to the market.