True or False. A paper mill company that purchases a chain of bookstores to sell books is an example of unrelated diversification. 

 

True

Step-by-step explanation

Unrelated diversification is a type of diversification when a new or unrelated product lines are introduced by the company and new markets are penetrated. In such situations, the companies are not directly connected with the existing business.

Unrelated diversification is based on the idea that diversification is acceptable for any new enterprise or company that can be purchased under favorable financial conditions and has the potential for high sales. This is important for a financial approach, It is introduced when research concludes that this unrelated diversification in a completely new area will produce substantially higher sales on the basis of identical goods, services, markets or complementary strategies compared to related diversification.