A Company Pursuing a Related Diversification Strategy Would Likely Address

question 79

Multiple Choice

A company pursuing a related diversification strategy would likely address the issue of what additional industries/businesses to diversify into by:

• A) locating businesses with well-known brand names and large market shares.
• B) identifying industries with the least competitive intensity.
• C) identifying an attractive industry whose value chain has good strategic fit with one or more of the firm's present businesses.
• D) identifying businesses with the potential to diversify the number and types of different activities in the firm's value chain makeup.
• E) locating new businesses with high degrees of financial fit with its present businesses.

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Definitions:

Fixed Cost

Expenses that do not change in proportion to the activity of a business, such as rent or salaries.

Perfectly Competitive

A market structure characterized by many buyers and sellers, free entry and exit, homogenous products, and perfect information, leading to firms being price takers.

Demand Curve

A visual representation indicating the link between the price of an item and the quantity of it that buyers seek.

Market-determined Price

The price of a good or service as dictated by the forces of supply and demand in a competitive market, without external interventions.