"Risk spreading" is a motive most likely to be served when firms undergo:
A) Horizontal integration
B) Vertical integration
C) Conglomerate integration
D) None of the above

Question

Quizplus · Accepted Answer

Conglomerate integration involves diversifying into unrelated businesses, which can help spread risk across different industries and economic cycles. This is particularly useful when a firm's core business is susceptible to significant fluctuations in demand or faces other industry-specific risks. Horizontal integration involves expanding into related businesses, while vertical integration involves expanding into the supply chain or distribution channels. Neither of these options necessarily spreads risk in the same way as conglomerate integration.

"Risk Spreading" Is a Motive Most Likely to Be Served