As the threat of corporate failure increases due to relatedness between a firm's business units, a firm may decide to:
A)increase its level of retained resources
B)operate in more certain environments and/or constrain the level of activity sharing
C)forego the benefits of synergy and divest business units
D)pursue unproven product lines

Question

Quizplus · Accepted Answer

Operating in more certain environments and/or constraining the level of activity sharing can help reduce the relatedness between business units and therefore decrease the threat of corporate failure. This allows the firm to maintain the benefits of synergy and avoid the need to divest business units or pursue unproven product lines. Increasing retained resources may not necessarily address the relatedness issue, and pursuing unproven product lines can increase the risk of failure.

As the Threat of Corporate Failure Increases Due to Relatedness