The basic premise of unrelated diversification is that:

a. the least risky way to diversify is to seek out businesses that are leaders in their respective industry.
b. the best companies to acquire are those that offer the greatest economies of scope rather than the greatest economies of scale.
c. the best way to build shareholder value is to acquire businesses with strong cross-business financial fit.
d. any company that can be acquired on good financial terms and that has satisfactory growth and earnings potential represents a good acquisition and a good business opportunity.
e. the task of building shareholder value is better served by seeking to stabilize earnings across the entire business cycle than by seeking to capture cross-business strategic fits.

Question

15-07-2021
Business

contestada

The basic premise of unrelated diversification is that:

a. the least risky way to diversify is to seek out businesses that are leaders in their respective industry.
b. the best companies to acquire are those that offer the greatest economies of scope rather than the greatest economies of scale.
c. the best way to build shareholder value is to acquire businesses with strong cross-business financial fit.
d. any company that can be acquired on good financial terms and that has satisfactory growth and earnings potential represents a good acquisition and a good business opportunity.
e. the task of building shareholder value is better served by seeking to stabilize earnings across the entire business cycle than by seeking to capture cross-business strategic fits.

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Parrain Parrain · Answer 1 · 2021-07-19T03:57:35+02:00

Answer: d. any company that can be acquired on good financial terms and that has satisfactory growth and earnings potential represents a good acquisition and a good business opportunity.

Explanation:

Unrelated diversification refers to the addition of a subsidiary to a company so as to penetrate new markets and make more income.

When a company is deciding on a company to acquire, it will choose one that can be acquired relatively cheaply or at least at a fair value give its assets as well as one that has good growth prospects and potential to earn returns that will increase the returns of the purchasing company.