Question

A noted professional art academy has founded an "artists and friends" travel company specializing in tours for artists to scenic locales, using its faculty as traveling teachers. In addition, the art academy has purchased a framing company to both make frames for academy art works, but also to sell museum-quality framing services to the public. The art academy is engaging in diversification based on ____ relatedness.

a. operational
b. corporate
c. intellectual
d. constrained

Answer 1

The art academy is diversifying its operations through an operational relatedness, where it extends its arts expertise into travel and framing services. The correct option is a.

Step-by-step explanation:

The art academy is engaging in diversification based on operational relatedness. This type of diversification occurs when a company expands its operations into areas that share similar operational processes, or that can benefit from the firm's existing management expertise and capabilities.

The art academy is leveraging its reputation and expertise in fine arts by branching out into travel and framing services where their artistic skills and aesthetic judgment can be applied.

For example, by organizing tours specifically for artists, the academy utilizes its faculty's skills in different settings, but still within the realm of promoting and teaching art.

Similarly, by acquiring a framing company, the academy ensures quality frames for its own artworks and offers its aesthetic standards to the public as museum-quality framing services. The correct option is a.