Final answer:
Related diversification in business can lead to increased market power and economies of scale, while intra-industry trading allows for specialization and risk reduction.
Step-by-step explanation:
Related diversification is a strategy where a business expands its activities into product lines that are similar to its current operations. One of the primary advantages is increased market power, as a diversified company can leverage its presence in one market to strengthen its position in another. Another advantage is the achievement of economies of scale, which means that as production increases, the average cost per unit decreases, leading to improved profitability.
Intra-industry trading refers to the exchange of similar products belonging to the same industry. This kind of trade allows countries to specialize in the production of certain goods, leading to increased efficiency and the ability to exploit economies of scale more effectively. Moreover, intra-industry trade can lead to a reduction in risk because spreading products across different markets can lessen the impact of market volatility on any single product line.