Which of the following statements is an advantage of related diversification strategy?
A) Related diversification strategy allows a firm to maintain several businesses that are not connected in any way.
B) The sharing of resources is a key component of developing economies of scope and often increases a firm's competitive advantage.
C) Related diversification strategies often achieve financial economies through the restructuring of business units.
D) It can allow a sick or dying company to use capital generated in a profitable division to prop it up for a short period of time.

Question

Quizplus · Accepted Answer

The sharing of resources is a key aspect of related diversification strategy that allows firms to develop economies of scope and increase their competitive advantage by leveraging resources across multiple businesses. This can lead to cost savings and increased efficiency, which can translate into superior financial performance. The other options, A, C, and D, are not advantages of related diversification strategy as they either contradict the basic premises of related diversification strategy or do not reflect the true benefits of related diversification.

Which of the Following Statements Is an Advantage of Related