A Company That Is Already Diversified May Choose to Broaden

question 73

Multiple Choice

A company that is already diversified may choose to broaden its business scope by building positions in new related or unrelated businesses because of all of the following considerations except

• A)its top management seeks to lessen the company's vulnerability to seasonal or recessionary influences or to threats from emerging new technologies,legislative regulations,and new product innovations that alter buyer preferences and resource requirements.
• B)its top management wants to increase its compensation.
• C)its top management wants to make new acquisitions to strengthen or complement some of its present businesses,market positioning,and competitive capabilities.
• D)the company's growth is sluggish and it wants the sales and profit boost that a new business can provide.
• E)it has resources or capabilities that are eminently transferable to other related or complementary businesses.

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Definitions:

Lockbox Fee

A charge imposed by banks for servicing and processing payments received in a lockbox, a service that accelerates the collection of receivables.

BAT Model

A framework for analyzing and understanding firms' strategic positions and potential competitive advantage.

Disbursements

The act of paying out or disbursing money, often related to the operational expenses of a business.

Interest Rate

The percent of principal charged by the lender for the use of its money or the return earned on an investment.