Retrenching to a Narrower Diversification Base Is

question 13

Multiple Choice

Retrenching to a narrower diversification base is

• A)usually the most attractive long-run strategy for a broadly diversified company confronted with recession, high interest rates, mounting competitive pressures in several of its businesses, and sluggish growth.
• B)a strategy that allows a diversified firm's energies to be concentrated on building strong positions in a smaller number of businesses rather the stretching its resources and managerial attention too thinly across many businesses.
• C)an attractive strategy option for revamping a diverse business lineup that lacks strong cross-business financial fit.
• D)sometimes an attractive option for deepening a diversified company's technological expertise and supporting a faster rate of product innovation.
• E)a strategy best reserved for companies in poor financial shape.

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Definitions:

Financial Flexibility

The ability of an entity to initiate actions and adapt to changes in its financial operations that maximize shareholders' value over time.

Resource Structure

The composition and allocation of resources within an organization or economy, including human, financial, and material resources.

Financial Structure

The mix of debt and equity that a company uses to finance its operations and growth.

Stockholders' Equity

Stockholders' equity represents the residual interest in the assets of an entity after deducting liabilities, essentially the net worth attributable to shareholders.