The corporate office of Novartis,formerly Ciba-Geigy,acts to improve many key activities,including resource allocation and reward and evaluation systems.This is an example of creating value by using
A) related diversification to achieve value by leveraging pooled negotiating power to attain economies of scope.
B) unrelated diversification to acquire financial synergies through portfolio management.
C) related diversification to acquire market power by leveraging pooled negotiating power.
D) related diversification to acquire parenting synergies through corporate restructuring and parenting.

Question

Quizplus · Accepted Answer

A corporation may diversify into unrelated businesses. Novartis has followed a successful strategy of unrelated diversification. Here, the primary potential benefits are derived largely from hierarchical relationships, that is, value creation derived from the corporate office. Examples of the latter would include leveraging some of the support activities in the value chain. Unrelated diversifiers often benefit from the best practices of sister businesses, even though their products, markets, and technologies may differ dramatically.

The Corporate Office of Novartis,formerly Ciba-Geigy,acts to Improve Many Key