A company should pursue unrelated diversification instead of related diversification when

Question

Quizplus · Accepted Answer

When a company's core skills are highly specialized and have few applications outside core business, pursuing unrelated diversification may be the best option. This is because related diversification typically involves leveraging existing core skills and knowledge to create synergies with the new business, which may not be possible if the core skills are not applicable. Pursuing unrelated diversification may allow the company to enter into new industries or businesses that are unrelated to its core competencies, without diluting its existing skills and knowledge.

A Company Should Pursue Unrelated Diversification Instead of Related Diversification