Question

The main focus of Neptune Corp. is to sell apparel, which amounts to 70 percent of its revenue. It also runs warehouses, distribution centers, and logistics as additional businesses that generate the rest of the 30 percent of the earnings. Which level of diversification is followed by Neptune Corp.?

A. Single business
B. Dominant business
C. Related-linked business
D. Dominant vertical business

Answer 1

Neptune Corp. follows a Dominant Business diversification level, as 70% of its revenue comes from apparel sales, and the remaining 30% from logistics and related operations. B. Dominant business

Step-by-step explanation:

The main focus of Neptune Corp. is to sell apparel, which constitutes 70 percent of its revenue. The additional businesses of Neptune Corp. such as warehouses, distribution centers, and logistics contribute the remaining 30 percent of its earnings. Given this information, Neptune Corp. follows a Dominant Business level of diversification. This means that while the company has diversified its operations beyond its main business, the majority of its revenue still comes from a single business unit, which, in this case, is the sale of apparel.

Businesses that maintain focus on their core competencies often have a competitive edge because they specialize in a specific area and can optimize their operations and resource allocation accordingly. For Neptune Corp., the apparel sales is evidently the core competency, and its other operations related to logistics support this main business line, which may enhance the overall efficiency and effectiveness of the company.