Question:
In business strategy, the concept of diversification involves expanding a company’s operations into new markets or product lines to reduce risk and enhance growth potential. Though, diversification can lead to increased revenue streams and a more resilient business model, critics contend that diversification can dilute a company’s core competencies and result in inefficiencies, ultimately harming overall performance.
Which of the following assumption would allow the above statements to be properly drawn?
In business strategy, the concept of diversification involves expanding a company’s operations into new markets or product lines to reduce risk and enhance growth potential. Though, diversification can lead to increased revenue streams and a more resilient business model, critics contend that diversification can dilute a company’s core competencies and result in inefficiencies, ultimately harming overall performance.
Which of the following assumption would allow the above statements to be properly drawn?
Which of the following assumption would allow the above statements to be properly drawn?
Updated On: Dec 10, 2024
- Companies often face significant challenges when trying to manage multiple product lines effectively
- Diversification strategies usually require little investment and resources
- A strong focus on core competencies is essential for maintaining optimal output
- Both a) and c) above
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The Correct Option is D
Solution and Explanation
For diversification to dilute core competencies and lead to inefficiencies, it is important to assume that managing multiple product lines is challenging (A) and that maintaining a strong focus on core competencies is essential (C). This assumption supports the argument that diversification could negatively impact performance.
Thus, the correct answer is Option (D).
Thus, the correct answer is Option (D).
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