Final answer:
A diversified firm's businesses show resource fit when they share and utilize core competencies and resources effectively, leveraging their main strengths to work synergistically, which can lead to a competitive advantage over firms with a broader focus.
Step-by-step explanation:
A diversified firm's collection of businesses exhibit resource fit when each business division not only complements the other in terms of strategy and objectives but also utilizes the core competencies and resources effectively across the firm.
This implies that the resources are shared optimally, and the businesses within the firm work synergistically rather than in isolation. This scenario allows the diversified company to potentially outperform competitors who may not have such synergies between their different lines of business.
Core competency refers to a company's main strength or strategic advantage. When a company focuses on its core competencies, it often achieves better success because it's leveraging what it does best. This approach is contrasted with attempting to operate a wide range of products, which may diffuse a company’s focus and resources.
Moreover, in today's global economy, companies are not restricted by local resource availability, as it was historically with resources like iron mines. Finally, the fact that businesses do not always cluster based on local resources underlines the importance of strategic resource fit over geographic proximity for competitive advantage.