The Success of Unrelated Diversification Is Dependent Upon Management's Ability

question 9

Multiple Choice

The success of unrelated diversification is dependent upon management's ability to:

• A) acquire new businesses that utilize much the same technology as existing businesses.
• B) divest businesses whose competitive strategies do not match the overall competitive strategy of the corporation.
• C) acquire new businesses having attractive distribution-related and customer-related strategic fits with existing businesses.
• D) spot bargain-priced companies with big upside potential and then turn around their operations quickly with the aid of the parent company's financial resources and managerial know-how.
• E) identify potential new acquisition candidates that are cash cows (as opposed to cash hogs).

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Definitions:

Administrative Burden

The workload and costs associated with bureaucratic procedures and regulations, often mentioned in the context of criticisms of government or organizational inefficiency.

U.S. Income Tax

The federal tax levied by the Internal Revenue Service on the annual earnings of individuals, corporations, trusts, and other legal entities.

Average Tax Rate

The proportion of total income that is paid as taxes, calculated by dividing the total amount of taxes paid by the total income.

Machiavellianism

The extent to which someone is emotionally detached and manipulative.