A Company Should Pursue Related Diversification Instead of Unrelated Diversification

question 74

Multiple Choice

A company should pursue related diversification instead of unrelated diversification when the company's:

• A) core skills are applicable to a wide variety of industrial and commercial situations.
• B) core skills are highly specialized and have few applications outside the core business.
• C) top managers are skilled at acquiring and turning around poorly run enterprises.
• D) main objective is to maximize its growth.
• E) free cash flow is high enough that it has funds available for investment.

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Definitions:

Skeptical

Having an attitude of doubt or a disposition to incredulity either in general or toward a particular object.

Self-Fulfilling Prophecy

A prediction or expectation that causes itself to become true, due to the feedback between belief and behavior.

Thomas Theorem

A theory in sociology which states that if people define situations as real, they are real in their consequences, highlighting the significance of perception in social interaction.

Socializing Agents

Individuals, groups, or institutions that play a role in integrating individuals into the norms, values, and practices of a society.