Question

The procedure for evaluating a diversified company's strategy involves all of the following steps except:

a) Assessing the attractiveness of each industry the company has diversified into.
b) Evaluating the fit between the company's business units and its overall mission.
c) Ignoring the financial performance of each business unit.
d) Considering how to improve the overall fit and performance of the diversified company.

Answer 1

In the procedure for evaluating a diversified company's strategy, assessing industry attractiveness, evaluating business unit fit with the company's mission, and considering performance improvement are all steps involved. Ignoring the financial performance of each unit, however, is not part of the process and should instead be carefully analyzed.

Step-by-step explanation:

The procedure for evaluating a diversified company's strategy involves several steps to determine whether the approach is beneficial to the company's growth and aligned with its objectives. These steps include:

Assessing the attractiveness of each industry the company has diversified into, which involves analyzing market conditions, competitiveness, and long-term prospects.

Evaluating the fit between the company's business units and its overall mission, ensuring that each unit contributes to the company's strategic goals.

Considering how to improve the overall fit and performance of the diversified company by identifying synergies and efficiencies.

The step that is not involved in this process is c) Ignoring the financial performance of each business unit. On the contrary, it is vital to closely examine the financial results of each unit to understand its contribution to the company's overall financial health.

Answer 2

The excluded step in evaluating a diversified company's strategy is 'ignoring the financial performance' of each business unit. Proper evaluation includes assessing industry attractiveness, checking alignment with the company's mission, and improving overall portfolio performance. Diversification in finance involves spreading investments to manage risk.

Step-by-step explanation:

The process for evaluating a diversified company's strategy includes various important steps, but ignoring the financial performance of each business unit is not one of them. In fact, assessing each unit's financial performance is crucial for understanding the impact of diversification on the company's overall health. Instead, the steps include assessing the attractiveness of the industries the company has entered, evaluating the alignment between the business units and the company's mission, and considering strategies to improve the synergy and performance of the entire portfolio.

Diversification is a key concept in financial investment, where buying stocks or bonds from a wide range of companies is recommended. This is to avoid the risks associated with investing in a single firm, which may be vulnerable to specific market conditions or management decisions. Diversification aims to mitigate these risks by spreading investments across various sectors, thus averaging out extreme fluctuations in value.