Question

Which of the following diversification leads to relatively higher profit for firm
A, horizontal
B, concrete
C, conglomerate
D, none

Answer 1

C, conglomerate diversification typically leads to relatively higher profit for a firm. This is because conglomerate diversification involves entering into a completely different industry or market segment, which allows the firm to capitalize on new growth opportunities and potentially gain a competitive advantage. By diversifying across unrelated businesses, a firm may be able to spread its risk and reduce its dependency on a single industry or market. Additionally, conglomerate diversification enables companies to leverage their existing resources, capabilities, and brand reputation to enter new markets and generate higher profits.