Once a Company Has Diversified into a Collection of Related

question 94

Multiple Choice

Once a company has diversified into a collection of related or unrelated businesses and concludes that some strategy adjustments are needed,which one of the following is not one of the main strategy options that a company can pursue?

• A) Stick closely with the existing business lineup
• B) Restructure the company's business lineup
• C) Craft new initiatives to build/enhance the company's reputation
• D) Divest some businesses and retrench to a narrower diversification base
• E) Broaden the diversification base

---

Definitions:

Profit Functions

Mathematical functions that represent a firm’s profits, typically as a function of price and quantity.

Pigouvian Tax

A tax imposed on any market activity that generates negative externalities (costs not reflected in the market price) with the aim of correcting the market outcome.

Cost Function

A mathematical relation that describes how production costs change with variations in the level of output.

Competitive Price

A pricing strategy that aims to attract customers by setting product prices similar or lower than rivals in the market.