Diversification may dissipate value if it is wrongly based on:
A)realizing economies of scope.
B)rescuing core business.
C)transferring competencies.
D)acquisitions and restructuring.
E)leveraging existing competencies.

Question

Diversification may dissipate value if it is wrongly based on:
A)realizing economies of scope.
B)rescuing core business.
C)transferring competencies.
D)acquisitions and restructuring. 
E)leveraging existing competencies.

Quizplus · Accepted Answer

Diversification to rescue a failing core business may not be a sound strategy as it can potentially spread the company's resources too thin and dilute its competitive advantage. This type of diversification is called concentric diversification and is often riskier than other forms of diversification.

Diversification May Dissipate Value If It Is Wrongly Based On