A Strategy Based on Diversification May Fail to Add Value

question 52

Multiple Choice

A strategy based on diversification may fail to add value because companies:

• A) seek to achieve differentiation instead of low cost.
• B) diversify into areas in which they have some knowledge and miss out on profitable opportunities in other areas.
• C) make acquisitions rather than develop new technologies on their own.
• D) incur bureaucratic costs that exceed the value created by the strategy.
• E) seek to achieve a low-cost position instead of differentiation.

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Definitions:

Unchanging Stimulus

A stimulus that remains constant and does not vary over time, often used in experiments to test sensory thresholds or responses.

Just Noticeable Difference

The minimal change in stimulation that can reliably be perceived as a difference.

Stimulus Difference

The minimal change in a stimulus that can produce a just noticeable difference in sensory perception.

Absolute Threshold

The minimum quantity of physical energy required for an observer to detect a stimulus 50% of the time.