Question

Pluto Corp. has been manufacturing hardware materials for its existing customer base for several years. Recently, the company introduced a new line of electronic products to its customers. Pluto Corp. is engaging in _____.

A. vertical integration
B. market penetration
C. value based initiative
D. horizontal diversification

Answer 1

Pluto Corp. is engaging in horizontal diversification by introducing a new line of electronic products to its customers, differentiating from its traditional hardware materials. D is the correct answer.

Step-by-step explanation:

When Pluto Corp., a company known for manufacturing hardware materials, introduces a new line of electronic products to its existing customer base, it is engaging in horizontal diversification. This strategy involves expanding into new markets by offering new products that are different from the company's current range.

It is distinct from vertical integration, which involves the acquisition or merging with companies along the production process to streamline operations and protect against losses.

Horizontal diversification is also separate from market penetration, which focuses on increasing sales of existing products in current markets, and it is not to be confused with value based initiatives that center on creating additional value for customers with enhanced products or services.