Which of the following reasons can make a diversification strategy an unwise course of action for a company to pursue?
A)Changing industry conditions
B)Changing firm-specific conditions
C)Diversification for the wrong reasons
D)Increasing bureaucratic costs of diversification
E)All of these choices

Question

Quizplus · Accepted Answer

All of these choices can make diversification strategy an unwise course of action for a company to pursue. Changing industry or firm-specific conditions can make it difficult for a company to successfully diversify. Pursuing diversification for the wrong reasons, such as simply trying to follow a trend or imitating competitors, can lead to misallocation of resources. Furthermore, increasing bureaucratic costs associated with diversification, such as the need for more complex management structures and systems, can outweigh any potential benefits.

Which of the Following Reasons Can Make a Diversification Strategy