With an unrelated diversification strategy, the types of companies that make particularly attractive acquisition targets are
A) struggling companies with good turnaround potential, undervalued companies that can be acquired at a bargain price, and companies that have bright growth prospects but are short on investment capital.
B) companies offering the biggest potential to reduce labor costs.
C) cash cow businesses with excellent financial fit.
D) companies that are market leaders in their respective industries.
E) companies that employ the same basic type of competitive strategy as the parent corporation's existing businesses.

Question

Quizplus · Accepted Answer

A company following an unrelated diversification strategy is entering into a completely different industry, so it needs to find companies that offer good potential for growth or turnaround potential at a bargain price. Companies with bright growth prospects but short on investment capital can also be attractive targets for acquisition. Cash cow businesses with excellent financial fit and companies that employ the same basic type of competitive strategy as the parent corporation's existing businesses may not be as attractive because they may not offer the same potential for growth and diversification. Companies that are market leaders in their respective industries may be attractive, but they may come at a higher price and may not necessarily offer the same level of growth potential.

With an Unrelated Diversification Strategy, the Types of Companies That