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Which of the following is a value reducing reason for diversification

User Grupo
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Final answer:

Value reducing reasons for diversification include lack of expertise in a new industry, spreading resources too thin, and conflicts in strategic goals or company culture.

Step-by-step explanation:

A value-reducing reason for diversification is when a company diversifies into an industry or market in which it has little or no expertise. This can lead to poor performance and decreased profitability. For example, if a technology company decides to diversify into the manufacturing industry without having the necessary knowledge and experience, it may face challenges and incur losses.

Another value-reducing reason for diversification is when a company spreads itself too thin across multiple industries or markets, resulting in a lack of focus and efficiency. This can lead to diluted resources, reduced competitiveness, and decreased profitability.

Lastly, diversification can be value-reducing when a company acquires or merges with another company that has conflicting strategic goals or a different company culture. This can result in integration challenges, misalignment of objectives, and decreased overall value.

User Muluken Getachew
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