Scenario 4.1
LMNO Corporation is a U.S.-based company with four distinct businesses, including a national music and video store chain, a rap music production company, a talent agency that represents several famous rap stars, and a digital video disc (DVD) production facility that makes and records music videos on DVDs. LMNO is in the process of acquiring another company, its major music store rival BeBop Records. Because its rap stars are so famous, LMNO charges crazed fans a higher price for its music compact discs and DVD videos. The fans don't mind, as they often have the opportunity to meet the rap stars in person at various LMNO music stores throughout the year. LMNO has a policy of promotion from within as well as a no-layoff policy, and all managers are required to rotate through each business before they can be promoted.
-Refer to Scenario 4.1. Which corporate-level strategy does LMNO appear to follow?
A) Related diversification
B) Unrelated diversification
C) Retrenchment
D) Differentiation
E) Cost leadership

Question

Quizplus · Accepted Answer

LMNO Corporation has four distinct businesses (music and video store chain, rap music production company, talent agency, and DVD production facility) that are related to each other in the music industry. Also, the acquisition of its major music store rival BeBop Records indicates a related diversification strategy. LMNO charges a higher price for its products because of the popularity of its rap stars, which is also related to its other businesses. Additionally, the policy of promotion from within and requirement for managers to rotate through each business shows that LMNO is focusing on creating value through synergies between its businesses.

Scenario 4.1 LMNO Corporation Is a U.S.-Based Company with Four Distinct Businesses