Unrelated diversification is a corporate-level strategy in which firms own unrelated businesses and attempt to increase their value through an internal capital market and/or the use of:

Question

Horn

Business

26 April, 21:50

Unrelated diversification is a corporate-level strategy in which firms own unrelated businesses and attempt to increase their value through an internal capital market and/or the use of:

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Benny · Answer 1

General Organizational Competencies

Explanation:

Internal capital markets refer to a situation whereby a company assesses the performance of it's different business divisions and decide the proportion of funds to be allocated.

Unrelated diversification refers to a situation wherein a business enters new unknown markets, adding an altogether new product which is non related to it's current offerings. Such business expansion or diversification is risky as there are more uncertainties involved.

Firms in such form of diversification attempt to increase their market value by focusing upon utilizing internal capital market for allocation of funds and at the same time utilizing it's general organizational competencies which would be the areas and functions wherein the firm holds a competitive edge.