Two Important Negatives of Unrelated Diversification Are

question 73

Multiple Choice

Two important negatives of unrelated diversification are

• A)underemphasizing the importance of resource fit and the strong likelihood of diversifying into businesses that top management does not know all that much about.
• B)insufficient cash flows to finance so many different lines of business and a lack of uniformity among the strategies of the businesses it has diversified into.
• C)volatile sales and profits and making the mistake of diversifying into too many cash cow businesses.
• D)the difficulties of competently managing a set of fundamentally different businesses and having a very limited competitive advantage potential that cross-business strategic fit provides.
• E)overinvesting in the achievement of economies of scope and the difficulties of achieving a good mix of cash cow and cash hog businesses.

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Definitions:

Weak Labour Laws

A situation where labor laws are insufficient to protect the rights of workers, often leading to exploitation or unsafe working conditions.

Global Management

The management of business and organizations with interests in more than one country.

Globalization

The process by which businesses or other organizations develop international influence or start operating on an international scale, leading to increased interconnectedness and interdependence of the world's markets and businesses.

Transnational Interdependence

The mutual dependency between countries, especially in areas of trade, investment, and business operations across borders.