Question

When is the best time to consider diversification for a company? A. The company has strong competitive position in its industry and industry growth is sluggish B. The company has strong competitive position in its industry and the industry is growing rapidly C. The company has weak competitive position in its industry and the industry is barely growing D. The company has weak competitive position in its industry and the industry is growing rapidly

Answer 1

Answer: A. The company has strong competitive position in its industry and industry growth is sluggish.

Explanation: Diversification is best done from a position of strength, a company should be doing well in its current industry and market before considering diversifying. A company having strong competitive position in its industry and when there is a sluggish growth in that industry, the company can diversified.

Diversification in corporate is a strategy that a company implement to increase market shares and sale volume by introducing new product in another industry and market different from the one they are operating.