Distinguish related and unrelated diversification with examples, and explain when each is preferred.

• A. Related diversification avoids any sharing opportunities; unrelated leverages synergies.
• B. Related diversification leverages synergies with existing businesses; unrelated diversifies into different industries to spread risk.
• C. Related diversification is always preferred when risk reduction is primary.
• D. Unrelated diversification means operating in the same industry.

Answer: (B)