Which of the following diversification leads to relatively higher profit for firm
A, horizontal
B, concrete
C, conglomerate
D, none
C, conglomerate diversification typically leads to relatively higher profit for a firm. This is because conglomerate diversification involves entering into a completely different industry or market segment, which allows the firm to capitalize on new growth opportunities and potentially gain a competitive advantage. By diversifying across unrelated businesses, a firm may be able to spread its risk and reduce its dependency on a single industry or market. Additionally, conglomerate diversification enables companies to leverage their existing resources, capabilities, and brand reputation to enter new markets and generate higher profits.
The correct answer is A, horizontal diversification.
Horizontal diversification refers to a strategy where a company expands its operations into related products or services, but within the same industry. It allows a firm to leverage its existing resources, capabilities, and customer base to generate relatively higher profits.
By entering new markets or segments within the same industry, the company can achieve economies of scale, reduce costs, increase market share, and build upon its existing knowledge and expertise. This helps in generating higher profits compared to other types of diversification strategies.
In contrast, concrete diversification (option B) is not a commonly used term in the context of business diversification. Conglomerate diversification (option C) involves expanding into unrelated industries, which may not necessarily lead to higher profits due to a lack of synergy and expertise in the new industry. Therefore, the answer is A, horizontal diversification.