What Is a Possible Cause of a Diversified Company Overusing

question 47

Multiple Choice

What is a possible cause of a diversified company overusing its resources and capabilities?

• A) The company goes on an acquisition spree whereby management is called on to assimilate and oversee many new businesses quickly.
• B) The company exceeds sufficient resource depth to do a creditable job of transferring skills and competencies from one of its businesses to another.
• C) The company declines to spread its competitive assets across many businesses.
• D) The business diversification is limited to a narrow business lineup.
• E) The business has a deep resource pool to create competitive advantage.

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Definitions:

Market Components

The different elements that make up a financial market, including stocks, bonds, currencies, commodities, and derivatives.

Expected Returns

The anticipated return on an investment, estimating the average of probability-weighted returns for a given asset.

Probability Distribution

A probability distribution is a mathematical function that provides the probabilities of occurrence of different possible outcomes in an experiment.

Variability

The extent to which data points in a set differ from each other and from the mean of the set; a measure of dispersion or volatility.