The Coordination Required to Realize Value from a Diversification Strategy

question 44

True/False

The coordination required to realize value from a diversification strategy based on transferring, sharing, or leveraging competencies is a major source of bureaucratic costs.

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Definitions:

Opportunity Cost

The price paid for missing out on the alternative that ranks second best when deciding.

Excess Capacity

Refers to a situation where a company has more production ability than is necessary for the current level of demand.

Differentiation Value

The perceived value added to a product or service that makes it stand out from competitors.

Markup Percentage

The percentage added to the cost of a product to calculate the selling price, based on desired profit.