A big advantage of related diversification is that it
A)offers ways for a firm to realize 1 + 1 = 3 benefits because the value chains of the different businesses present competitively valuable cross-business relationships.
B)is less capital intensive and usually more profitable than unrelated diversification.
C)involves diversifying into industries having the same kinds of key success factors.
D)is less risky than either vertical integration or unrelated diversification due to lower capital requirements.
E)passes the industry attractiveness test and thus offers the best route to 2 + 2 = 4 benefits.

Question

Quizplus · Accepted Answer

Related diversification allows firms to benefit from synergies between different businesses by sharing resources, knowledge, and capabilities. This can increase the value of each business and create competitive advantages that would not be possible if the businesses were operating independently. Therefore, related diversification can help firms achieve 1 + 1 = 3 benefits.

A Big Advantage of Related Diversification Is That It