25 Questions
When does a company use horizontal diversification?
To leverage existing distribution channels and enter new markets
In what situation is conglomerate diversification used?
Limited growth opportunities within the company's current industry
Under what circumstance is concentric diversification employed?
The company wants to reduce risk by entering a market with some familiarity and expertise
When is conglomerate diversification not a suitable strategy?
When there are limited growth opportunities within the company's current industry
In what scenario is horizontal diversification not applicable?
When there are limited growth opportunities within the company's current industry
Match the following diversification strategies with their primary purposes:
Concentric diversification = Reduce risk by entering a familiar market Conglomerate diversification = Reduce business risk by entering industries with different economic cycles Horizontal diversification = Leverage existing distribution channels to enter new markets
Match the following diversification strategies with their primary purposes:
Concentric diversification = Utilize existing expertise and familiarity in a market Conglomerate diversification = Seek opportunities for growth outside current industry Horizontal diversification = Achieve cost savings through shared resources across similar businesses
Match the following diversification strategies with their primary purposes:
Concentric diversification = Utilize underutilized company assets Conglomerate diversification = Diversify to industries with different economic cycles Horizontal diversification = Leverage existing customer relationships to enter new markets
Match the following diversification strategies with their primary purposes:
Concentric diversification = Utilize existing supply chain to enter new markets Conglomerate diversification = Invest in new avenues for growth Horizontal diversification = Identify limited growth opportunities within current industry
Match the following diversification strategies with their primary purposes:
Concentric diversification = Utilize existing distribution channels to enter new markets Conglomerate diversification = Seek opportunities for growth outside current industry Horizontal diversification = Achieve cost savings through shared resources across similar businesses
Match the diversification strategy with its primary purpose:
Concentric Diversification = Reduce risk by entering a familiar market Conglomerate Diversification = Reduce business risk by entering industries with different economic cycles Horizontal Diversification = Leverage existing distribution channels to enter new markets
Match the diversification strategy with its suitable financial condition:
Concentric Diversification = Company has underutilized resources Conglomerate Diversification = Limited growth opportunities within the current industry Horizontal Diversification = Opportunities for cost savings through shared resources
Match the diversification strategy with its potential for shared operations:
Concentric Diversification = Company has underutilized resources Horizontal Diversification = Leverage existing distribution channels to enter new markets Conglomerate Diversification = Strong financial position to invest in unrelated businesses
Match the diversification strategy with its focus on market dynamics:
Concentric Diversification = Reduce risk by entering a familiar market Conglomerate Diversification = Identify entirely new growth avenues Horizontal Diversification = Leverage existing distribution channels to enter new markets
Match the diversification strategy with its approach to risk reduction:
Concentric Diversification = Reduce risk by entering a familiar market Conglomerate Diversification = Strong financial position to invest in unrelated businesses Horizontal Diversification = Leverage existing distribution channels to enter new markets
What is concentric diversification and when is it used?
Concentric diversification is used when the company wants to reduce risk by entering a market with some familiarity and expertise.
When is conglomerate diversification employed and what does it aim to achieve?
Conglomerate diversification is used when there are limited growth opportunities within the company's current industry, and it seeks to identify entirely new avenues for growth.
In what scenario is horizontal diversification utilized and what does it leverage?
Horizontal diversification is used when the company wants to leverage its existing distribution channels, supply chain, or customer relationships to enter new markets.
Under what circumstance is conglomerate diversification considered and what risk does it aim to reduce?
Conglomerate diversification is considered when the company wants to reduce business risk by entering industries with different economic cycles and market dynamics.
When is horizontal diversification applicable and what potential cost savings does it offer?
Horizontal diversification is applicable when there are opportunities for cost savings through shared resources and operations across similar businesses.
Explain concentric diversification and provide an example of when it would be used.
Concentric diversification is when a company enters a market with familiarity and expertise to reduce risk. An example would be a technology company entering the software services market due to its existing knowledge and skills in technology.
When is conglomerate diversification employed and what is its primary purpose?
Conglomerate diversification is used when there are limited growth opportunities within the company's current industry, and its primary purpose is to identify entirely new avenues for growth.
What is the focus of horizontal diversification and when is it typically used?
Horizontal diversification focuses on leveraging existing distribution channels, supply chain, or customer relationships to enter new markets. It is typically used when there are opportunities for cost savings through shared resources and operations across similar businesses.
Under what circumstances would a company choose to engage in conglomerate diversification?
A company would choose to engage in conglomerate diversification when it wants to reduce business risk by entering industries with different economic cycles and market dynamics, or when it has a strong financial position and can afford to invest in unrelated businesses.
When is concentric diversification typically employed and what does it aim to achieve?
Concentric diversification is typically employed when a company has underutilized resources and aims to reduce risk by entering a market with some familiarity and expertise.
Take this quiz to test your knowledge of diversification strategies in business. Learn about concentric, conglomerate, and horizontal diversification and understand when each strategy is used. Sharpen your understanding of how companies enter new markets and manage risk.
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