When a corporation pursues a related constrained diversification strategy, financial controls may not add value to strategy implementation efforts because it is difficult to:
A)evaluate the financial performance of individual business units and their managers
B)transfer capital between units
C)deal with the multiple responsibilities and authorities of division managers
D)identify which objective criteria to monitor

Question

Quizplus · Accepted Answer

In a related constrained diversification strategy, the different business units are related to each other, and financial controls may not add much value because it can be difficult to evaluate the financial performance of individual units and their managers. This is because the businesses may have different accounting methods or may be affected by different factors. Additionally, transferring capital between units may not be necessary or feasible, and division managers may have multiple responsibilities and authorities that make it difficult to implement financial controls across the entire corporation. Therefore, in a related constrained diversification strategy, other performance measures may be more effective in evaluating the success of the strategy implementation.

When a Corporation Pursues a Related Constrained Diversification Strategy, Financial