To create value for shareholders via diversification, a company must
A)get into new businesses that are profitable.
B)diversify into industries that are growing rapidly.
C)spread its business risk across various industries by only acquiring firms that are strong competitors in their respective industries.
D)diversify into businesses that can perform better under a single corporate umbrella than they could perform operating as independent, stand-alone businesses.
E)diversify into businesses that have either key success factors or value chains that are similar to its present businesses.

Question

Quizplus · Accepted Answer

Diversifying into businesses that can perform better under a single corporate umbrella than they could perform operating as independent, stand-alone businesses is the best option to create value for shareholders via diversification. This ensures that the company is able to leverage its resources and capabilities to enhance the performance of the new businesses and generate synergies that can lead to increased profits and competitiveness. Additionally, if the new businesses are complementary to the existing ones, the company can benefit from economies of scope and cross-selling opportunities.

To Create Value for Shareholders Via Diversification, a Company Must