When a company decides to expand into new industries, it must:
A) develop a "multibusiness model" that justifies its entry into different businesses.
B) halt marketing activities in the current industry to avoid being associated with one specific industry.
C) select a new CEO and reappoint the board of directors.
D) create one common business model for all the industries rather than each business unit.
E) avoid talking about ways of increasing profitability in the business model.

Question

Quizplus · Accepted Answer

When a company decides to expand into new industries, it must develop a "multibusiness model" that justifies its entry into different businesses. This model helps the company identify and capitalize on synergies between the different industries, as well as potential risks and challenges. Halting marketing activities in the current industry or reappointing the board of directors are not necessary steps for expanding into new industries, while creating one common business model for all the industries could ignore important differences between them. Avoiding talking about ways of increasing profitability would be counterproductive as profitability is a key motivation for expanding into new industries.

When a Company Decides to Expand into New Industries, It