How can HRM contribute to the success of ABC's diversification?

• A. HRM can implement policy changes across the entire group.
• B. HRM should reduce training to save costs.
• C. HRM should centralize all decisions at top management.
• D. Effective HRM can recruit, train, motivate, and retain specialist staff, helping ABC operate the new factory efficiently and innovate further.

Answer: (D)

The main idea is that a diversified business relies on people with the right skills, motivation, and commitment. HRM helps secure those capabilities for a new venture by recruiting specialists needed for the new factory, providing targeted training to get them up to speed with the specific technologies and processes, keeping them motivated to perform at high levels, and retaining them so the company doesn’t lose critical expertise as it expands. This combination—finding the right people, developing their skills, energizing them to perform, and keeping them—directly supports both efficient operation of the new factory and ongoing innovation.

When diversification brings new products or processes, having a workforce with specialized knowledge and the ability to adapt quickly is essential. HRM’s role in onboarding, ongoing training, performance management, and reward structures helps ensure that the staff can operate efficiently, improve processes, and contribute to new ideas.

Reducing training would weaken capability and slow productivity. Centralizing all decisions at the top can stifle the local insight and speed needed for a new plant. Implementing policy changes across the entire group might be useful, but it doesn’t specifically address building the workforce needed for the new factory and ongoing innovation.