When Firms Diversify into Related Businesses, the Primary Potential Benefits

question 61

True/False

When firms diversify into related businesses, the primary potential benefits come from horizontal relationships, which are businesses sharing intangible and tangible resources.

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Definitions:

Franchise Agreement

A legal, binding contract between a franchisor and franchisee, outlining the terms and conditions for operating a franchised business.

Joint Venture

A collaborative agreement where several participants contribute their resources to fulfill a targeted objective.

Licensing Agreement

A contract in which one company (the licensor) grants permission to another company (the licensee) to use the licensor’s intellectual property in return for payment.

Ethical Decision

The process of choosing among alternatives in a manner consistent with ethical principles.