Answer :
A firm follows a related diversification strategy when it derives less than 70% of its revenues from a single business activity and obtains revenues from other lines of business that are linked to the primary business activity.
When a firm enters a new industry that bears significant parallels to one or more of its current industries, related diversification takes place. Disney's acquisition of ABC is an illustration of related diversification since movies and television shows are both types of entertainment. The potential to turn cross-company strategic synergies into a competitive advantage over business competitors whose activities do not offer is often what helps make related diversification an appealing approach.
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