One Strategic Fit-Based Approach to Related Diversification Would Be to

question 63

Multiple Choice

One strategic fit-based approach to related diversification would be to

• A)diversify into new industries that present opportunities to combine value chain activities of two or more businesses to lower costs.
• B)diversify into those industries where the same kinds of driving forces and competitive forces prevail,thus allowing use of much the same competitive strategy in all of the businesses a company is in.
• C)acquire rival firms that have broader product lines so as to give the company access to a wider range of buyer groups.
• D)acquire companies in forward distribution channels (wholesalers and/or retailers).
• E)expand into foreign markets where the firm currently does no business.

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Definitions:

Marginal Revenue

The increase in profit from selling an extra unit of a good or service.

Average Nightly Room Rate

A measure used in the hospitality industry to calculate the average price paid per room per night.

Monopolistic Competition

A marketplace setup where plenty of businesses distribute products that resemble each other but are not duplicates, allowing them a partial degree of marketplace power and the ability to individualize their offerings.

Pure Competition

A market structure characterized by a large number of small firms, homogenous products, and easy market entry and exit, leading to price takers rather than price makers.