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12 October, 08:50

White Leo Motors (WLM) Inc. generates 85% of its revenues by manufacturing luxury sports cars. The company derives the rest of its revenues by selling its sports merchandise that includes apparel, shoes, and other accessories under the same brand name. Which of the following terms best describes WLM?

a. Conglomerate firm

b. Dominant-business firm

c. Related-linked diversified firm

d. Single-busines firm

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Answers (1)
  1. 12 October, 09:06
    0
    The answer is B.

    Explanation:

    As WLM has 15% of their revenue coming from selling other relevant products leaving the other 85% coming from selling luxury sport cars, this level of revenue diversification catagorizes WLM into a dominant-business firm which is defined as firm having 70%-95% of their income from a single business.

    WLM is diversified well as enough not to be considered as single-business firm which has more than 95% of their revenue from a single type product. However, to be defined as a related-linked diversified firm, WLM's revenue sources should be more diversified in which less than 70% of their income coming from a single business.

    WLM is far from being the Conglomerate as Conglomerate is defined as a Corporation operating in multi-industry.
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