When an organization expands into a totally new line of business, it is implementing a strategy of:
A) Related diversification
B) Unrelated diversification
C) Cross-functional diversification
D) Product line diversification
E) Industry diversification

Question

Quizplus · Accepted Answer

Unrelated diversification refers to expanding into a new line of business that has no connection or synergy with the existing business. This type of diversification is often adopted to achieve growth or reduce risk by entering into a market with different demand patterns or economic cycles. Related diversification, on the other hand, involves expanding into a business that is related or complementary to the existing business. Cross-functional diversification refers to leveraging the existing capabilities of the organization to enter into a different business domain. Product line diversification involves expanding the range of products or services within the same business category. Industry diversification refers to expanding into a related industry or market segment.

When an Organization Expands into a Totally New Line of Business