How can a firm pursuing a diversification strategy enhance its overall corporate performance by leveraging financial economies?

Available options are:

A. by using internal capital markets as a source of value creation

B. by adding more unrelated businesses into its corporate portfolio

C. by increasing its coordination and influence costs

D. by investing in businesses under the question mark quadrant of the BCG matrix

Option A. By using internal capital markets as a source of value creation

Explanation:

The internal capital market is a mechanism of allocation of funds of an organization to its various projects that meets its desired return criteria and is in-accordance with their mission statement.

Option A is correct because the The reason is that if the organization is investing in the projects that will generate greater value by using its funds then it will increase the corporate performance.

Option B is incorrect because investing in unrelated business decreases the risk level associated with the corporate operations and is serious trouble for the company if it doesn't have any prior experience of the unrelated business.

Option C is incorrect because cordination might not bring value to corporations as there are many examples of mismanagement and collapse of corporations in the past.

Option D is also incorrect because almost one third of new businesses collapse every year. The investment in question mark is thus a very risky option and can effect the company by significant losses.