An unrelated diversification strategy can create value through two types of financial economies: (1) efficient internal capital allocations and (2) purchasing other corporations and restructuring their assets.

Question

Quizplus · Accepted Answer

An unrelated diversification strategy can create value through efficient internal capital allocations by reallocating funds from low-performing business units to high-performing ones. It can also create value through purchasing other corporations and restructuring their assets by utilizing the expertise and resources of the parent company to improve the performance of the newly acquired business.

An Unrelated Diversification Strategy Can Create Value Through Two Types