Example of unrelated diversification

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Reference no: EM132254132

1. As long as a single business company can achieve profitable growth opportunities in its present industry,

a) It needs to avoid putting all its “eggs” in one industry basket

b) It will face diminishing market opportunities and stagnating sales in its principal business

c) Its opportunities are limited in leverage existing competencies and capabilities by expanding into businesses where these same resources are key success factors and valuable competitive assets

d) It has diminished prospects to lower cost by entering related businesses and/or an opportunity to transfer a powerful and well-respected brand name to the products of other businesses and thereby increase the sales and profits of these newly entered businesses

e) There is no urgency to peruse a diversification strategy

2. Which of the following is NOT an example of unrelated diversification?

a) Homebuilder acquiring a forest products company

b) A manufacturer of golf shoes acquiring a retailer of fishing rods and lures

d) A steel producer acquiring a hardware store

e) An online merchandiser acquiring a retail supermarket that specializes in natural and organic foods

3. The procedure for evaluating a diversified company’s strategy involves all of the following steps except

a) Checking whether the firm’s resources fit the requirements of its present business lineup

b) Assessing the competitive strength of each business the company has diversified into

c) Ranking the performance prospects of the various businesses from best to worst

d) Checking the competitive advantage potential of cross-business strategic fit among the company’s various business units

e) Determination of degree of risk involved with each business unit

Reference no: EM132254132

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