Question

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

Answer 1

Answer:

Option C

Explanation:

Portfolio management:

It deals with the techniques of decision making about policies, investment mix, allocating assets for individuals and firms, risk management and investment-objective matching.

It basically deals with the determination of the strengths, weaknesses, threats and chances of growth in the selection of  domestic vs. international, debt vs. equity, etc and all that comes across encountered in order to maximize return at a given risk that could be possible.

Thus the feature used by Novartis is unrelated diversification can be utilized in order to achieve higher values by the combination of two different goods by the firms with the help of portfolio management.