The essence of the prevailing theory of diversification is that firms should diversify when they:
A) have market power in their industry and are market leaders.
B) have control of tactical and strategic competitive actions.
C) are market followers and have a secure niche.
D) have excess resources,capabilities,and core competencies with multiple uses.

Question

Quizplus · Accepted Answer

The prevailing theory of diversification suggests that firms should diversify when they have excess resources, capabilities, and core competencies with multiple uses. This means that the firm has the financial and organizational resources to venture into new business areas and can leverage its existing strengths and capabilities to create competitive advantages in those areas. Options A, B, and C do not align with the prevailing theory of diversification.

The Essence of the Prevailing Theory of Diversification Is That