The essence of the prevailing theory of diversification is that firms diversify when they:
A)have excess resources, capabilities and core competencies with multiple uses
B)have market power in their industry and are market leaders
C)have control of tactical and strategic competitive actions
D)are market followers and have a secure niche

Question

Quizplus · Accepted Answer

The prevailing theory of diversification suggests that firms diversify when they have excess resources, capabilities, and core competencies that can be used in multiple ways. This means that the firm already has strengths in certain areas and can leverage them to explore new markets and products without compromising its existing business. Market power and control of competitive actions may be factors in diversification, but they are not the essence of the prevailing theory. Market followers with a secure niche may not have excess resources to diversify in the first place.

The Essence of the Prevailing Theory of Diversification Is That