A strategy based on diversification may fail to add value because companies
A) seek to achieve differentiation instead of low cost.
B) diversify into areas in which they have some knowledge and miss out on profitable opportunities in other areas.
C) make acquisitions rather than develop new technologies on their own.
D) incur bureaucratic costs that exceed the value created by the strategy.
E) seek to achieve cost leadership instead of differentiation.

Question

Quizplus · Accepted Answer

Diversification can lead to increased complexity and bureaucratic costs, which may outweigh the benefits and value created by the strategy.

A Strategy Based on Diversification May Fail to Add Value