At Cooper Industries, there are few similarities in the products it makes or the industries in which it completes. The corporate office adds value through such activities as superb human resource practices and budgeting systems. This is an example of using
A)related diversification to acquire economies of scope by leveraging pooled negotiating power.
B)related diversification to acquire market power by leveraging core competencies.
C)unrelated diversification to acquire financial synergies through portfolio management.
D)unrelated diversification to acquire parenting, restructuring, and financial synergies through corporate restructuring and parenting.

Question

Quizplus · Accepted Answer

In this case, the corporate office of Cooper Industries adds value to its acquired, unrelated businesses by performing such activities as auditing their manufacturing operations, improving their accounting activities, and centralizing union negotiations. The primary potential benefits of this unrelated diversification strategy are derived largely from hierarchical relationships; that is, value creation derived from the corporate office.

At Cooper Industries, There Are Few Similarities in the Products