Final answer:
A concentric diversification strategy is used by a company to add new businesses that produce related products or are involved in related markets, leveraging the company's core competencies and existing customer base to achieve synergy and competitive advantage. The correct option is C.
Step-by-step explanation:
A concentric diversification strategy is a business approach where an organization adds new businesses that produce related products or are involved in related markets and activities. This strategy relies on leveraging the company's core competency or unique strengths.
By focusing on related areas, the company can capitalize on its existing knowledge and customer base, potentially gaining a competitive advantage through synergy and more efficient use of resources.
For example, a company that manufactures printers might use a concentric diversification strategy to start producing ink cartridges or paper, which are related products used with printers. This move could allow the company to provide a more complete solution to customers and streamline its production processes, taking advantage of economies of scale and scope.
On the contrary, a conglomerate is a type of company that owns businesses producing unrelated products, which helps diversify risk. However, the downside can be a lack of focus and synergy between the different business units.