1. Which of the following is a good reason to diversify? To pursue any new opportunity...

1. Which of the following is a good reason to diversify?

		To pursue any new opportunity that allows the firm to continue growing its revenue stream
		To spread your financial risk and produce more stable corporate earnings
		To reinvest profits from one business in another to prevent the 2nd business from going under
		To reinvest profits from one business in another with greater growth potential
		All of the above are good reasons

2.

Identify a true statement about a horizontal alliance.

		It can occur between firms that have a supplier-buyer relationship
		It can occur between firms who are not positioned at the same stage of the value chain but offer complementary products/services
		It can occur when the output of one of the firms in the relationship is the input of the other
		It can occur between firms that are positioned at different stages along the value chain
		None of the above

Expert Solution

1. Which of the following is a good reason to diversify?

(e) All of the above are good reasons.

Your reach increases when you have more products and you need more markets to sell them. New products plus new markets are what defines the diversification strategy. More markets mean your distribution increases and overall turnover increases. To pursue any new opportunity that allows the firm to continue growing its revenue stream.

Cross-selling: Cross-selling becomes more possible with the diversification strategy. You can introduce older products in the new market or introduce new products in an older and more mature market. o spread your financial risk and produce more stable corporate earnings.

To reinvest profits from one business in another to prevent the 2nd business from going under.

2. Identify a true statement about a horizontal alliance.

Horizontal strategic alliances are formed between partners operating in the same business area. The firm partners with a competitive company to improve its position against other competitors. Horizontal alliances tend to be anti-competitive, hence anti-trust law should be considered in this type of alliance. It is a strategy to sell a product in multiple markets. Hence option (e) is correct None of the above

keosha answered 5 months ago

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