What Rationales for Unrelated Diversification Are Not Likely to Increase

question 90

Multiple Choice

What rationales for unrelated diversification are not likely to increase shareholder value?

• A) In order to reduce risk by spreading the company's investments over a set of truly diverse industries.
• B) To enable a company to achieve rapid or continuous growth.
• C) To chance that market downtrends in some of the company's businesses will be partially offset by cyclical upswings in its other businesses.
• D) To provide benefits to managers such as high compensation and reduction in employment risk.
• E) All of these.

Understand the process and effects of journalizing closing entries.

Distinguish between different types of liabilities and their classifications on the balance sheet.

Recognize the difference between a company’s operating cycle and fiscal year.

Understand the classification and characteristics of current assets.

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Definitions:

Organizational Sources

The origins of information, authority, or resources within an organization, which can influence decisions and strategies.

Organizational Network

The complex pattern of relationships, communications, and interactions within an organization.

Star Position

A prominent or leading status in a particular field, organization, or group, often characterized by significant influence or visibility.

Coercive Power

A form of power that is based on the ability to deliver punishments or remove privileges to influence behavior.