With an Unrelated Diversification Strategy,the Types of Companies That Make

question 85

Multiple Choice

With an unrelated diversification strategy,the types of companies that make particularly attractive acquisition targets are

• A) financially distressed companies with good turnaround potential,undervalued companies that can be acquired at a bargain price,and companies that have bright growth prospects but are short on investment capital.
• B) companies offering the biggest potential to reduce labor costs.
• C) cash cow businesses with excellent financial fit.
• D) companies that are market leaders in their respective industries.
• E) companies that are employing the same basic type of competitive strategy as the parent corporation's existing businesses.

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Definitions:

Variable Costs

Costs that change in proportion to the level of goods or services that a business produces.

Labor Costs

The total expenses incurred by employing labor, including wages, salaries, and benefits.

Raw Materials

The basic material from which a product is made, often used in manufacturing and production processes.

Fixed Costs

Fixed costs are business expenses that remain constant regardless of the level of production or sales.