Author Question: What is conglomerate diversification? What are its advantages and disadvantages? What will be an ... (Read 114 times)

tiara099 · **on:** Jul 6, 2018

What is conglomerate diversification? What are its advantages and disadvantages?

What will be an ideal response?

Question 2

Which of the following statements is true about the strategic factors impacting the choice of organization design?

A) As organization size increases, work specialization decreases.
B) Large organizations need more coordinating mechanisms than small ones.
C) Centralized structures are used in turbulent environments.
D) Organizations that use digital technology tend to be structured on a centralized basis.

carlsona147 · **Reply #1 on:** Jul 6, 2018

Answer to Question 1

Conglomerate diversification involves managing a portfolio of businesses that are unrelated to each other. One advantage of conglomerate diversification is that risks are spread across different markets and industries. Potential downturns in one business segment may be offset by higher earnings in other business units. Research suggests that as a whole, conglomerates are not as profitable as the other types of corporate diversification strategies. The main problems appear to be that conglomerate diversification does not build on a firm's core competencies and that corporate executives do not have sufficient knowledge to effectively manage disparate business units.

Answer to Question 2

B