Which of the following is NOT a reason to implement a diversification strategy?
A) To enhance the value creation of the entire company
B) To expand the business portfolio in order to reduce managerial employment risk
C) To gain market power relative to competitors
D) To increase the low performance levels of a business unit

Question

Quizplus · Accepted Answer

Diversification strategies are used to spread risks and enhance the value creation of the entire company by adding new products, expanding into new markets, and reducing dependence on a few products or markets. B and C are valid reasons for implementing a diversification strategy, as they can reduce employment risk for managers and increase market power relative to competitors. However, increasing the low performance levels of a business unit is not necessarily a reason for implementing diversification. In some cases, it may be more effective to address the performance issues within the existing business unit rather than expanding into new areas.

Which of the Following Is NOT a Reason to Implement