When a firm has incentives and resources to diversify,one would expect the firm to be engaged in:
A) a higher level of diversification.
B) only related diversification.
C) a dominant business strategy.
D) a single line of business.

Question

Quizplus · Accepted Answer

When a firm has incentives and resources to diversify, it is more likely to engage in a higher level of diversification. This is because the firm has the resources to invest in and manage multiple lines of business, and the incentives to diversify often come from a desire to spread risk or take advantage of synergies between different businesses. So, option A is the best choice. Options B, C, and D are not necessarily true, as a firm with incentives and resources to diversify may choose to pursue related or unrelated diversification, may have a dominant business strategy or not, and may have more than one line of business.

When a Firm Has Incentives and Resources to Diversify,one Would