Which of the Following Is a Justification That a Business

question 23

Multiple Choice

Which of the following is a justification that a business adopts to justify diversification?

• A) The strategy would allow a company to save themselves from the drawbacks of risk pooling.
• B) Entry into new industries will rescue the core business and lead to long-term growth and profitability.
• C) It decreases the range of threats the company encounters, and gives more time to managers had to spend dealing with these threats.
• D) Business cycles of different industries are inherently easy to predict, so it is likely that a diversified company will find that an economic downturn affects only one of its business units.
• E) Growth creates value for stockholders and growth is the objective of a diversification strategy.

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Definitions:

Lean Operations

Eliminate waste through a focus on exactly what the customer wants.

Organizational Culture

The shared values, beliefs, and practices that shape the social and psychological environment of a business or organization.

JIT Partnerships

Collaborative relationships between suppliers and manufacturers to ensure just-in-time delivery of parts and materials, reducing inventory costs.

Unnecessary Activities

Tasks or processes that do not add value to the product or service from the perspective of the customer, often targeted for elimination in efficiency improvement efforts.