A Company Should Pursue Unrelated Diversification Instead of Related Diversification

question 14

Multiple Choice

A company should pursue unrelated diversification instead of related diversification when

• A) its core skills are highly specialized and have few applications outside core business.
• B) the company's top management is skilled at acquiring and turning around poorly run enterprises.
• C) its core technological skills are applicable to a wide variety of industrial and commercial situations.
• D) it wants to maximize growth.
• E) the bureaucratic costs of implementation do not exceed the value that can be created by realizing economies of scope.

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Definitions:

Systems Thinking

A holistic approach to analysis that focuses on the way that a system's constituent parts interrelate and how systems work over time and within the context of larger systems.

Interdependencies

Mutual reliance between entities, where the actions or outcomes of one entity depend on those of another.

Organizational Processes

Entails the methods, procedures, and routines used within an organization to produce and deliver its products or services.

External Acquisition

External acquisition refers to the process by which a company or organization purchases or acquires another company, assets, or significant shares from outside its current operations to expand its business.