What internal conflict has arisen due to ABC's diversification into recycling?

• A. Frequent supplier disagreements.
• B. Tension between traditional management and innovative staff needs.
• C. Lack of customer demand.
• D. Regulatory compliance issues.

Answer: (B)

Diversifying into a new area like recycling often requires a different way of running the business, which can create friction inside the company. When ABC broadens into recycling, traditional management tends to favor established routines, known costs, and careful risk-taking, while innovative staff push for new approaches, faster experimentation, and the skills and autonomy needed to build the new venture. This mismatch over how to allocate resources, measure performance, and pursue the transformation creates an internal conflict—people on the old side want to keep things steady, whereas the newer, more creative team wants change and new capabilities. Without alignment, decisions slow, incentives pull in different directions, and the recycling project struggles to take hold. The situation calls for clear transformation goals, aligned incentives, cross-functional collaboration, and change-management efforts so both sides can work toward a shared path forward. External pressures like supplier issues, customer demand, or regulatory compliance would involve outside factors, whereas this scenario centers on internal tensions between management style and staff needs.