"The last three years of severe drought conditions have been brutal to our lawn care business. We survived, but our business is too concentrated," said Rocco Camanetti, owner of Camanetti & Sons. "I propose that we expand in new areas-trucking, catering, and dry cleaning-to minimize our risks due to market fluctuations in one industry." Rocco is advocating a(n) ________ strategy.
A) lateral integration
B) vertical integration
C) related diversification
D) unrelated diversification
E) horizontal integration

Question

Quizplus · Accepted Answer

Rocco is suggesting that his company expands into completely different industries (trucking, catering, and dry cleaning) which do not have a direct relation to their current lawn care business. This approach is known as unrelated diversification, where a company expands its operations into areas that are distinct from its current line of business to minimize risks associated with market fluctuations in one industry.

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