Which type of diversification strategy tends to be less profitable as a result of corporate executives lacking sufficient knowledge to effectively manage disparate business units?
A) Concentration strategy
B) Vertical integration strategy
C) Concentric diversification strategy
D) Conglomerate diversification strategy

Question

Quizplus · Accepted Answer

Conglomerate diversification strategy involves diversifying into unrelated business units, which can lead to corporate executives lacking sufficient knowledge to effectively manage the disparate business units. This can ultimately result in less profitability compared to other diversification strategies such as concentric diversification, which involve entering related business units that can be managed more effectively.

Which Type of Diversification Strategy Tends to Be Less Profitable