Which of the following statements about cross-business strategic fit in a diversified enterprise is NOT accurate?
A) Strategic fit between two businesses exists when the management know-how accumulated in one business is transferable to the other.
B) Strategic fit exists when two businesses present opportunities to economize on marketing, selling, and distribution costs.
C) Competitively valuable cross-business strategic fits are what enable related diversification to produce a synergistic performance outcome.
D) Strategic fit is primarily a by-product of unrelated diversification and exists when the value chain activities of unrelated businesses possess economies of scope and good financial fit.
E) Strategic fit exists when a company can transfer its brand-name reputation to the products of a newly acquired business and add to the competitive power of the new business.

Question

Quizplus · Accepted Answer

The statement that strategic fit is primarily a by-product of unrelated diversification is not accurate. In fact, strategic fit is often more valuable in related diversification where businesses share commonalities and can create synergies through joint resource sharing and transfer of knowledge and skills. Unrelated diversification is often pursued for financial reasons such as risk reduction and portfolio diversification rather than strategic fit.

Which of the Following Statements About Cross-Business Strategic Fit in a Diversified