A Strategy Based on Diversification May Fail to Add Value

question 52

Multiple Choice

A strategy based on diversification may fail to add value because companies:

• A) seek to achieve differentiation instead of low cost.
• B) diversify into areas in which they have some knowledge and miss out on profitable opportunities in other areas.
• C) make acquisitions rather than develop new technologies on their own.
• D) incur bureaucratic costs that exceed the value created by the strategy.
• E) seek to achieve a low-cost position instead of differentiation.

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Definitions:

Delegation

The process of assigning responsibility and authority to others to carry out specific tasks or functions.

Hierarchy

An arrangement or institution where individuals or entities are classified above or below each other based on their status or power.

Organizational Behavior

The study of individual and group dynamics within an organizational context, focusing on improving productivity and promoting healthy work environments.

Real-life Settings

Contexts or environments that occur naturally in everyday life, as opposed to controlled or artificial situations.