The authors of our textbook argue that "...clearly, not all diversification moves, including those involving mergers and acquisitions, erode performance." Diversification is achieved through two methods: 1) through horizontal relationships, and 2) through hierarchical relationships. The benefits of these two relationships are mutually exclusive.
There are two problems with this statement. The first problem is that while diversification can be achieved through horizontal relationships ...
This solution discusses the diversification question presented. A thorough explanation is provided.