Question

Compared to nonfamily firms, family businesses

a. are more likely to engage in corporate diversification.
b. employ fewer people.
c. are more likely to have a focused strategy.
d. have slightly lower return on assets.

Answer 1

Family businesses tend to have a focused strategy, and can vary in size but often are small-scale, employing a diverse number of people.

Step-by-step explanation:

When comparing family businesses to nonfamily firms, one significant difference is in their approach to strategy. Family businesses are more likely to have a focused strategy, concentrating on a single or a few products that align with their core competencies. This is in contrast to other firms that may engage in extensive corporate diversification.

In terms of employment, family businesses vary widely in size, but many are part of the 35% of U.S. firms with fewer than 100 workers, as indicated by the U.S. Census Bureau. The misconception that family firms might employ fewer people is dispelled when considering the vast array of small-scale operations that span across numerous industries and can include any number of employees.

Therefore, among the options provided, family businesses are more likely to have a focused strategy rather than engaging in diversification, employing fewer people, or having a slightly lower return on assets.