A Company That Is Already Diversified May Choose to Broaden

question 96

Multiple Choice

A company that is already diversified may choose to broaden its business scope by building positions in new related or unrelated businesses because:

• A) it has resources or capabilities that are eminently transferable to other related or complementary businesses.
• B) the company's growth is sluggish and it wants the sales and profit boost that a new business can provide.
• C) management wants to lessen the company's vulnerability to seasonal or recessionary influences or to threats from emerging new technologies,legislative regulations,and new product innovations that alter buyer preferences and resource requirements.
• D) it wants to make new acquisitions to strengthen or complement some of its present businesses,market positioning,and competitive capabilities.
• E) All of these.

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Definitions:

Alien Corporation

A corporation formed in another country but doing business in the United States.

Domestic Corporation

In a given state, a corporation that is organized under the law of that state.

Corporate Veil

A legal concept that separates the personality of a corporation from the personalities of its shareholders, and protects them from being personally liable for the company's debts and other obligations.

Corporate Privilege

A legal principle that allows corporations to withhold certain confidential communications from disclosure, often relating to legal advice.