The acquisition of a pizza chain by the American Cigar Co represents a process known as________________?
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Answer: B. diversification
Explanation
Diversification occurs when a company expands into entirely different industries. Acquiring a pizza chain by a cigar company represents cross-industry business expansion. Conglomerates use diversification to reduce risks across multiple market sectors. Corporate diversification helps firms offset slumps in one industry with gains elsewhere. Entering unrelated markets requires new operational expertise and management strategies. Mergers and acquisitions are common vehicles for corporate diversification efforts.
Business strategists evaluate diversification to ensure profitable long-term growth. Investors monitor corporate acquisitions to assess portfolio risk and market strategy. Anti-monopoly watchdogs review large cross-industry takeovers for market fairness. Monopoly involves controlling a single industry rather than diversifying across sectors. Planned obsolescence refers to designing products with intentionally limited useful lifespans. Takeover attempt describes the hostile acquisition process rather than the diversification strategy.
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