Firms following an unrelated diversification strategy can reduce their overall risk when:
A) resources are allocated among many businesses with different risk profiles.
B) they limit their growth to acquiring only successful companies.
C) synergies are developed among the business units.
D) management refuses to purchase businesses outside their sphere of expertise or knowledge.

Question

Quizplus · Accepted Answer

Firms following an unrelated diversification strategy can reduce their overall risk by allocating resources among many businesses with different risk profiles. This ensures that if one business unit experiences a downturn, the overall impact on the firm is reduced as other business units may still perform well.

Firms Following an Unrelated Diversification Strategy Can Reduce Their Overall