Which of the following statements is true regarding unrelated diversification?
A) The bureaucratic costs associated with managing unrelated diversification are much greater than those associated with related diversification.
B) An organization pursuing a strategy of unrelated diversification tries to obtain value by sharing resources or by transferring functional skills from one division to another.
C) Organizations with a strategy of unrelated diversification are likely to use a conglomerate structure.
D) Considerably more communication and coordination are needed to create value from unrelated diversification than from related diversification.

Question

Quizplus · Accepted Answer

Organizations with a strategy of unrelated diversification are likely to use a conglomerate structure. This allows them to operate different businesses under one umbrella without any direct relationship between them. A and D are incorrect because managing unrelated diversification can actually lead to lower bureaucratic costs and less need for coordination compared to related diversification. B is incorrect because sharing resources and transferring functional skills is typically associated with related diversification.

Which of the Following Statements Is True Regarding Unrelated Diversification