Diversification into Unrelated Businesses Can Add Value for Shareholders If

question 39

Multiple Choice

Diversification into unrelated businesses can add value for shareholders if:

• A) the brand is licensed to other users.
• B) retaining control of the economies of scope reduces transaction costs.
• C) the unrelated businesses have a high risk component.
• D) managers' pay is linked to the size of the firm and not profits.

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Definitions:

Promotion

Function of informing, persuading, and influencing a purchase decision.

Identity

The distinctive characteristics or personality of an individual, organization, or brand, which sets it apart from others.

Product Placement

Form of promotion in which marketers pay fees to have their products showcased in various media, ranging from newspapers and magazines to original online television and movies.

The Social Network

A film directed by David Fincher that depicts the founding of the social networking website Facebook and the resulting lawsuits.