Firms Following an Unrelated Diversification Strategy Can Reduce Their Overall

question 34

Multiple Choice

Firms following an unrelated diversification strategy can reduce their overall risk when:

• A)resources are allocated among many businesses with different risk profiles
• B)they limit their growth by acquiring only successful companies
• C)synergies are developed among the business units
• D)management refuses to purchase businesses outside their sphere of expertise or knowledge

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Definitions:

Gestalt Psychologists

Psychologists who focus on human perception and cognitive processes, emphasizing the whole is greater than the sum of its parts.

Complex Pattern

A configuration of elements that are intricately entwined, making it complicated to understand, predict, or analyze.

Perception

The process by which individuals organize and interpret their sensory impressions in order to give meaning to their environment.

Induced Movement

The perception of motion caused by certain visual cues, leading stationary objects to appear as if they are moving.