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:

Collective Bargaining

The negotiation process through which management and unions reach an agreement about compensation, working hours, and working conditions for the bargaining unit.

Compensation

The total amount of the monetary and non-monetary pay provided to an employee by an employer in return for work performed as required.