The Fastest and Easiest Way for a Firm to Diversity

question 48

Multiple Choice

The fastest and easiest way for a firm to diversity its portfolio of businesses is through acquisition because

• A)of barriers to entry in many industries.
• B)it is difficult and time intensive for companies to develop products that differ from their current product line.
• C)innovation in both the acquired and the acquiring firm is enhanced by the exchange of competencies resulting ᶠʳᵒᵐ ᵃᶜqᵘᶦˢᶦᵗᶦᵒⁿ.
• D)unrelated acquisitions are usually uncomplicated because the acquired firm is allowed to continue to function independently as it did before acquisition.

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Definitions:

Behavioral Economists

Investigators who look into how psychological, cognitive, emotional, cultural, and social variables play a role in the economic decisions of individuals and organizations.

Ultimatum Game

A game in economic experiments where one player proposes a division of a sum of money and the second player can accept or reject the proposal. If rejected, both players receive nothing.

Behavioral Economics

A field of study that examines the effects of psychological, cognitive, emotional, cultural, and social factors on the economic decisions of individuals and institutions.

Dictator Game

An experimental paradigm in behavioral economics and psychology, where an individual (the "dictator") determines how to split a given resource between themselves and another participant.