A Big Advantage of Related Diversification Is That It

question 68

Multiple Choice

A big advantage of related diversification is that it

• A)offers ways for a firm to realize 1 + 1 = 3 benefits because the value chains of the different businesses present competitively valuable cross-business relationships.
• B)is less capital intensive and usually more profitable than unrelated diversification.
• C)involves diversifying into industries having the same kinds of key success factors.
• D)is less risky than either vertical integration or unrelated diversification due to lower capital requirements.
• E)passes the industry attractiveness test and thus offers the best route to 2 + 2 = 4 benefits.

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