Successful unrelated diversification through restructuring is typically accomplished by:
A)restructuring a target firm's assets by selling underperforming divisions and placing the remaining divisions under rigorous financial controls
B)a 'random walk' of good luck in picking firms to buy
C)seeking out high-technology firms in high growth industries
D)a top management team that is not constrained by pre-established ideas of how the firm's portfolio should be developed

Question

Quizplus · Accepted Answer

Restructuring a target firm's assets by selling underperforming divisions and placing the remaining divisions under rigorous financial controls is a proven strategy for successful unrelated diversification through restructuring. It allows the company to focus on its core competencies and divest from underperforming businesses, while also implementing financial discipline and accountability. A random walk of good luck (B) is not a reliable strategy, and seeking out high-technology firms in high growth industries (C) may not necessarily lead to successful unrelated diversification. While having a top management team that is not constrained by pre-established ideas (D) can be beneficial, it alone may not guarantee success.

Successful Unrelated Diversification Through Restructuring Is Typically Accomplished By