The Two Biggest Drawbacks or Disadvantages of Unrelated Diversification Are

question 64

Multiple Choice

The two biggest drawbacks or disadvantages of unrelated diversification are

• A)underemphasizing the importance of resource fit and the strong likelihood of diversifying into businesses that top management does not know all that much about.
• B)insufficient cash flows to finance so many different lines of business and a lack of uniformity among the strategies of the businesses it has diversified into.
• C)volatile sales and profits and making the mistake of diversifying into too many cash cow businesses.
• D)the difficulties of competently managing many different businesses and being without the added source of competitive advantage that cross-business strategic fit provides.
• E)over-investing in the achievement of economies of scope and the difficulties of achieving a good mix of cash cow and cash hog businesses.

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