Business Diversification Strategies

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Questions and Answers

What is one potential outcome of a company deciding to diversify?

Reduction in operational costs
Immediate market dominance
Extraordinary rewards and risks (correct)
Guaranteed profit in all areas

Which of the following companies has been cited as a success story in diversification?

Snapple
Quaker Oats
General Electric (correct)
RCA

What commonality do Quaker Oats and RCA share regarding diversification?

Both experienced notable failures in diversification (correct)
Both achieved significant profits from their diversification efforts
Both companies focused exclusively on food products
Both diversified into the technology sector successfully

What is a challenge companies face when considering diversification?

<p>Evaluating the extraordinary risks involved (B)</p> Signup and view all the answers

What happened with Quaker Oats' entry into the fruit juice business?

<p>It faced significant losses and exited the business (A)</p> Signup and view all the answers

Study Notes

Diversification in Business

Diversification is a complex decision for companies, involving significant rewards and risks.
Successful examples include companies like General Electric, Disney, and 3M which have thrived through diversification strategies.
Diversification can lead to increased market share, reduced risk, and new revenue streams when executed successfully.

Notable Failures in Diversification

Quaker Oats faced challenges with its acquisition of Snapple, ultimately exiting the fruit juice market.
RCA, while attempting to diversify, encountered failures in various ventures such as computers, carpets, and rental cars, illustrating the potential pitfalls of diversification.
These failures highlight the importance of strategic fit and market understanding when diversifying.

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Description

Explore the intricate world of business diversification, examining both its successful implementations and notable failures. Learn how companies like General Electric and Disney thrived while Quaker Oats and RCA faced challenges. This quiz will help you understand the risks and rewards associated with diversification in business.