Which Statement Regarding Diversification Analysis Is Most Accurate

question 46

Multiple Choice

Which statement regarding diversification analysis is most accurate?

• A) Companies should only use diversification analysis if they are well-established; new companies that use this process run the risk of trying to do too much too soon.
• B) For any product, there is both a current and a new market; for any market, there is both a current and a new product.
• C) Most companies discover that there is at least one product that is targeted to the wrong market.
• D) Diversification analysis is only effective for consumer products.
• E) Diversification analysis is used to forecast and calculate industry sales for new products.

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Definitions:

Fixed Costs

Expenses that remain constant regardless of the amount of goods produced or sold, including lease payments, wages, and coverage fees.

Transportation Costs

Costs incurred during the transportation of items or resources from one place to another.

Cost Leadership

A strategy focusing on gaining competitive advantage by being the lowest cost producer in an industry while maintaining acceptable quality levels.

Manufacturing Facilities

Physical locations equipped with machinery and labor, where raw materials are transformed into finished products.