The number of separate businesses a firm operates and the degree of ________ of those businesses increase a firm's level of diversification.
A) economy of scale
B) relatedness
C) diversity
D) management

Question

Quizplus · Accepted Answer

The degree of relatedness of the businesses is what determines the level of diversification. If the businesses are related and can share resources, knowledge, and technology, then the firm is more diversified. The number of separate businesses alone does not necessarily increase diversification, as they could be unrelated and not add any value. Economy of scale, diversity, and management are important factors for a firm's success but not directly related to diversification.

The Number of Separate Businesses a Firm Operates and the Degree