Which of the Following Reasons Can Make a Diversification Strategy

question 26

Multiple Choice

Which of the following reasons can make a diversification strategy an unwise course of action for a company to pursue?

• A) Steady industry conditions
• B) Varying firm-specific conditions
• C) Diversification for pooling risks
• D) Decreasing bureaucratic costs
• E) Greater differentiation of products

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Definitions:

Supply Curve

A graphical representation used in economics to show the relationship between the price of a good or service and the quantity of it that producers are willing to supply.

Government's Revenue

The money received by a government from taxes and non-tax sources to enable it to undertake government expenditures.

Efficiency Loss

Refers to the loss of economic efficiency when the optimal allocation of resources is not achieved, often due to market failures or distortions.

Demand Curve

A chart that displays how the cost of a product affects the amount consumers want to buy, usually showing a decline from left to right.