Question

At Balboa Industries, there are few similarities in the products it makes or the industries in...

At Balboa Industries, there are few similarities in the products it makes or the industries in which it competes. The corporate office adds value through such activities as superb management practices and and its ability to more efficiently allocate its financial resources. This is an example of using

  • A. related diversification to acquire economies of scale.

  • B. related diversification to acquire market power.

  • C. unrelated diversification to acquire economies of scope.

  • D. unrelated diversification to acquire managerial synergies.

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Answer #1

Answer

Option D) is correct. Unrelated diversification to acquire managerial synergies.

Reason:

Since there are only few similarities in the products it makes, there is no point of economies of scale or scope. Thus, it is taking up unrelated diversification. Also, since the corporate office adds value through such activities as superb management practices and and its ability to more efficiently allocate its financial resources, the diversification is aimed at acquiring managerial synergies.

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