A firm that chooses to move into unrelated product areas, by acquiring existing businesses, is likely to find that the strategy requires relatively little integration across businesses and sharing of resources and therefore is would consider a using holding company structure.

Question

Quizplus · Accepted Answer

Some firms may choose to move into unrelated product areas, typically by acquiring existing businesses. Frequently, their rationale is that acquiring assets and competencies is more economical or expedient than developing them internally. Such an unrelated, or conglomerate, strategy requires relatively little integration across businesses and sharing of resources. Thus, a holding company structure becomes appropriate.

A Firm That Chooses to Move into Unrelated Product Areas