The Success of Unrelated Diversification Is Dependent Upon Management's Ability

question 57

Multiple Choice

The success of unrelated diversification is dependent upon management's ability to

• A) acquire new businesses that utilize much the same technology as existing businesses.
• B) divest businesses whose competitive strategies do not match the overall competitive strategy of the corporation.
• C) acquire new businesses having attractive distribution-related and customer-related strategic fits with existing businesses.
• D) spotting bargain-priced companies with big upside potential and then turning around their operations quickly with the aid of the parent company's financial resources and managerial know-how.
• E) identify potential new acquisition candidates that are cash cows (as opposed to cash hogs).

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Definitions:

Distribution of Power

The way in which authority, control, and decision-making capabilities are allocated and exercised across different levels within an organization or society.

Economic Growth

The increase in the production of goods and services in an economy over a period of time, often measured by the rise in the Gross Domestic Product (GDP).

Income

The monetary payment received by an individual or household for work or through investments.

Wealth

The abundance of valuable financial assets or physical possessions which can be converted into a form that can be used for transactions.