Question

The curvilinear relationship of corporate performance and diversification indicates that: a. the less related the businesses acquired, the higher performing the organization. b. dominant-business corporate strategies tend to be higher performing than related constrained or unrelated business strategies. c. none of the strategies consistently outperforms the others. d. the highest performing business strategy is related constrained diversification.

Answer 1

Answer: d. the highest performing business strategy is related constrained diversification.

Explanation:

Multiple studies by strategic management experts have shown that business performance tends to relate in a curvelinear fashion with diversification and have shown that the companies who take advantage of this the most are companies using a related constrained diversification strategy.

This strategy involves expanding by acquiring companies or Businesses which have a similar business to the original company and then sharing resources, assets and knowledge amongst them.

In doing this they are applying the knowledge and resources as well as core competencies that made the original company successful to the acquired businesses so that they too can grow as the original company did.