When a firm simultaneously practices operational relatedness and corporate relatedness:
A) it is difficult for investors to observe the value created by the firm.
B) the firm is likely to be overvalued by investors.
C) the firm will suffer from diseconomies of scope that outweigh cost savings generated.
D) the firm is seeking to create value through financial economies.

Question

Quizplus · Accepted Answer

When a firm practices both operational and corporate relatedness simultaneously, it can be challenging for investors to observe and quantify the value created by the firm. This can lead to undervaluation or overvaluation of the firm's shares, which can ultimately affect the firm's financial performance.

When a Firm Simultaneously Practices Operational Relatedness and Corporate Relatedness