Question

Mattel, a major US toy manufacturer, virtually gave away The learning company (TLC), a maker of software for toy, to rid itself of a disatrous acquisition. Mattel, which had paid $3.5 billion for TLC, sold the unit to affiliate to Cores Technology Group for rights to a share of future profits. Was this a related or unrelated diversification for Mattel? Explain your answer.? How might your answer to the first question have influenced the outcome?

Answer 1

This is related diversification because the learning company has been provided to the technology group fore right of the share of future profits so this is a related diversification because both the companies are in the similar business and the learning company can be e used for the purpose of the technology group.

if the first acquisition has been successful then, it would have been an unrelated diversification because the toy manufacturer was acquiring the learning company and it was completely unrelated diversification which would have led to disastrous outcome