Which concept describes the extent to which a firm owns multiple businesses and the relatedness among them?

• A. Corporate strategy
• B. Synergy
• C. Diversification
• D. SWOT analysis

Answer: (C)

Diversification describes the extent to which a firm owns multiple businesses and how related they are to one another. It looks at breadth—how many distinct business units exist—and the degree of relatedness among them, from closely connected to completely unrelated. Related diversification leverages shared skills, markets, or technologies to create potential synergies, while unrelated diversification spreads risk but adds management complexity. Corporate strategy is the broader plan for coordinating all units, synergy refers to the value created by combining activities, and SWOT analysis is a tool for assessing strengths, weaknesses, opportunities, and threats, not a description of a firm’s portfolio. So this concept best captures the idea in the question.