The Two Biggest Drawbacks or Disadvantages of Unrelated Diversification Are

question 93

Multiple Choice

The two biggest drawbacks or disadvantages of unrelated diversification are

• A)the difficulties of passing the cost-of-entry test and the ease with which top managers can make the mistake of diversifying into businesses where competition is too intense.
• B)the difficulties of capturing financial fit and having insufficient financial resources to spread business risk across many different lines of business.
• C)demanding managerial requirements and the limited competitive advantage potential that cross-business strategic fit provides.
• D)ending up with too many cash hog businesses and too much diversity among the competitive strategies of the businesses the company has diversified into.
• E)the difficulties of achieving economies of scope and conflicts/incompatibility among the competitive strategies of the company's different businesses.

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Definitions:

Evaluation Apprehension

Anxiety or fear regarding being judged or evaluated by others.

Human Cultural Group

A human cultural group refers to people sharing common cultural characteristics, practices, beliefs, and values, distinguishing them from other groups.

Social Loafing

The occurrence in which people put in less effort towards attaining a goal while working as part of a team compared to when they work individually.

Free Rider Problem

A situation in group dynamics where some members benefit from resources or goods without contributing to the cost or effort, leading to potential issues in collective endeavors.