A Company Should Pursue Unrelated Diversification Instead of Related Diversification

question 14

Multiple Choice

A company should pursue unrelated diversification instead of related diversification when:

• A) its core skills are highly specialized and have few applications outside its core business.
• B) the company's top managers are skilled at acquiring and turning around poorly run enterprises.
• C) its core technological skills are applicable to a wide variety of industrial and commercial situations.
• D) it wants to maximize growth.
• E) the bureaucratic costs of implementation do not exceed the value that can be created by realizing economies of scope.

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Definitions:

Disclosure Exemption

Situations under which a company is allowed not to disclose certain information that would normally be required by accounting standards.

Government Agency

An organization at the federal, state, or local level that administers specific functions on behalf of the government.

Subsidiaries

Companies that are controlled by a parent company through majority ownership or significant control over management decisions.

Disclosure Exemption

A provision allowing an entity to not disclose certain information that is normally required by accounting standards.