Question

Which one of the following is not a factor that makes it appealing to diversify into a new industry by forming an internal start-up subsidiary to enter and compete in the target industry?
When the industry is growing rapidly and the target industry is comprised of several relatively large and well-established firms
When the industry is growing rapidly and the target industry is comprised of several relatively large and well-established firms

Answer 1

Answer:

When the industry is growing rapidly and the target industry is comprised of several relatively large and well-established firms.

Explanation:

Diversification is a form of growth strategy. Growth strategies involve a significant increase in performance objectives (usually sales or market share) beyond past levels of performance. Many organizations pursue one or more types of growth strategies. One of the primary reasons is the view held by many investors and executives that "bigger is better." Growth in sales is often used as a measure of performance. Even if profits remain stable or decline, an increase in sales satisfies many people. The assumption is often made that if sales increase, profits will eventually follow. Diversifying is therefore appealing when the target company has large sales factor and well established firms