Re: ::: vuaskari.com ::: MGT603_Midterm papers Correction Thread by Binish

Question No: 22    ( Marks: 1 )    - Please choose one

 Which of the following is NOT a situation when an organization should use an unrelated diversification strategy?

       ► When an organization's present channels of distribution can be used to market the new products to current customers

       ► Revenues from current products/services would increase significantly by adding the new related products

       ► When an organization competes in a highly competitive and/or a no-growth industry

       ► When the new products have counter-cyclical sales patterns compared to an organization's present products

Unrelated differentiation is a diversification strategy where companies expand their operation into markets or products beyond current resources and capabilities. This strategy is also sometimes referred to as the conglomerate strategy.

The unrelated diversification seems to be applicable and meaningful in at least two cases:

Firstly, if the parent company is able to provide different businesses with managerial knowledge and expertise that strengthens the individual business, it will be very feasible to diverse into different markets that will potentially increase parent company profits.

Secondly, unrelated diversification might give a company the oppurtunity of increasing the strength of the economy of different markets, and to develop competencies that can be shared between different markets and products. 

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