Diversification may dissipate value if it is wrongly based on:
A) realizing economies of scope.
B) rescuing core business.
C) transferring competencies.
D) acquisitions and restructuring.
E) leveraging existing competencies.

Question

Quizplus · Accepted Answer

Diversification should not be used as a way to rescue a failing core business. This can result in the dissipation of value as resources are spread too thin, and the company may not have the necessary expertise or resources to succeed in a new market. It is important for diversification to be based on leveraging existing competencies or transferring competencies to new markets in order to create synergies and realize economies of scale or scope. Acquisitions and restructuring can also be effective if they are part of a strategic plan for diversification.

Diversification May Dissipate Value If It Is Wrongly Based On