Which strategy is effective when new, but related, products could be offered at highly competitive prices?
A) Forward integration
B) Related diversification
C) Backward integration
D) Conglomerate diversification
E) Unrelated diversification

Question

Quizplus · Accepted Answer

Related diversification involves expanding a business into new products or services that are related to the existing business. This would be the best strategy for offering new, but related, products at highly competitive prices. By leveraging the existing knowledge and resources, the company can create advantages over the competition and offer products at lower prices. Forward integration (A) involves expanding into activities closer to the end customer, which is not directly related to offering new products. Backward integration (C) involves expanding into activities closer to the source of raw materials, which is also not directly related to offering new products. Conglomerate diversification (D) involves expanding into unrelated businesses, which is not the best strategy when the products are related to the existing business. Unrelated diversification (E) involves expanding into completely unrelated businesses, which is not the best strategy when new, but related, products are being offered.

Which Strategy Is Effective When New, but Related, Products Could