What Makes Related Diversification an Attractive Strategy Is the

question 48

Multiple Choice

What makes related diversification an attractive strategy is the

• A) ability to broaden the company's product line.
• B) opportunity to convert the competitive advantage potential into 1 + 1 = 3 gains in shareholder value.
• C) potential for improving the stability of the company's financial performance.
• D) ability to serve a broader spectrum of buyer needs.
• E) added capability it provides in overcoming the barriers to entering foreign markets.

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Definitions:

Price Skimming Strategy

A price skimming strategy involves setting high prices initially and then gradually lowering them to attract more price-sensitive customers.

Product Innovation

The development of new or significantly improved goods or services that deliver value to customers and differentiate a company from its competitors.

Target Return

Is a pricing strategy aimed at achieving a specific return on investment or sales volume goals.

Maximizing Profits

A profit strategy that relies primarily on economic theory. If a firm can accurately specify a mathematical model that captures all the factors required to explain and predict sales and profits, it should be able to identify the price at which its profits are maximized.