Which of the following statements is TRUE?
A)Diversification creates value in all circumstances.
B)Diversification can create value by leveraging certain core competencies and capabilities.
C) Compared with diversified firms, non-diversified single-business firms are better able to spread risk.
D) Firms that undertake acquisitions have mastered the art of post-acquisition integration.

Question

Which of the following statements is TRUE?
A)​Diversification creates value in all circumstances.
B)​Diversification can create value by leveraging certain core competencies and capabilities.
C) ​Compared with diversified firms, non-diversified single-business firms are better able to spread risk.
D) ​Firms that undertake acquisitions have mastered the art of post-acquisition integration.

Quizplus · Accepted Answer

Diversification can create value when a company leverages its core competencies and capabilities to enter new markets or produce new products. However, diversification does not always create value, as some companies may overstretch themselves and lose focus on their core competencies. The statement in option C is not true, as non-diversified firms are more exposed to the risks of their single business and may suffer greater losses in the event of industry-specific downturns. The statement in option D is also not universally true, as post-acquisition integration can be difficult and many firms struggle to successfully integrate acquired companies.

Which of the Following Statements Is TRUE