The Risk for Firms That Follow the Unrelated Diversification Strategy

question 81

Multiple Choice

The risk for firms that follow the unrelated diversification strategy in developed economies is that:

• A) external investors tend to dump the stocks of conglomerates during economic downturns.
• B) conglomerates are typically owned by one powerful entrepreneur and do not survive his/her retirement or death.
• C) government regulations, especially in Europe, have periodically forced the dissolution of conglomerates.
• D) competitors can imitate financial economies more easily than they imitate economies of scope.

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Definitions:

Genetically Identical Copy

An organism, cell, or piece of genetic material that is exactly the same in genetic composition as the one from which it was derived, as in cloning.

Cloning

Cloning is a process of producing genetically identical individuals of an organism either naturally or artificially.

Human

A member of the species Homo sapiens, characterized by a capacity for complex language, thought, and social organization.

Disclosing Information

The act of making information known to others, which in a medical context may involve patient data and requires adherence to privacy laws.