Which of the following statements about portfolio strategy is true?
A) The evidence supports the usefulness of acquiring unrelated businesses.
B) Dysfunctional consequences can occur when companies are categorized.
C) The strategy may weaken the strongest performer in the corporate portfolio, the problem child.
D) Labeling a top performer as a cash cow will strengthen employee morale.
E) Maslow's hierarchy can be used to determine the level of motivation needed to acquire and make a success of portfolio strategy.

Question

Quizplus · Accepted Answer

Categorizing businesses can prove dysfunctional because doing so relies on past performance and tends to weaken cash cows. Research evidence does not support the usefulness of acquiring unrelated diversification. Employees in a company labeled a cash cow are likely to feel that the firm is "milking" (rather than growing) their business. The Maslow item is a red herring.

Which of the Following Statements About Portfolio Strategy Is True