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:

Customer Orientation

A business strategy that focuses on creating a positive experience for customers by understanding and meeting their needs.

Ownership Utility

The value that comes from a product's ability to satisfy ownership rights, including the use, control, and transfer of the product.

Time Utility

The increase in the value of a product or service by making it available at a convenient time for the consumer.

Place Utility

The value added to products or services by making them more accessible or available to potential users or consumers.