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.
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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.