Two Important Negatives of Unrelated Diversification Are

question 114

Multiple Choice

Two important negatives 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 a set of fundamentally different businesses and having a very limited competitive advantage potential that cross-business strategic fit provides.
• E) overinvesting 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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Definitions:

Self-handicapping

A behavior or action taken to excuse potential failure or poor performance in advance.

Academic Failure

The inability to meet the prescribed criteria or standards of academic achievement.

Intrinsic Motivation

is the drive to engage in an activity for its own sake, deriving pleasure and satisfaction from the participation itself, not from external rewards.

Mastery of Tasks

The degree to which an individual has acquired the knowledge, skills, and abilities to proficiently perform specific tasks.