A Company That Is Already Diversified May Choose to Broaden

question 94

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 of all of the following EXCEPT

• 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) its top management wants to increase its compensation.

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Definitions:

Emerged

The process of coming into being or becoming important or prominent.

Slippery Slope

A fallacy in reasoning that suggests taking a minor action will lead to major and oftentimes undesirable consequences.

Gratuities

Small gifts, often money, given in appreciation for service, which can sometimes raise ethical concerns in professional relationships.

Police

A body of officers representing the civil authority of government, responsible for maintaining public order and safety, enforcing laws, and preventing, detecting, and investigating criminal activities.