Capacity overbuilding is most likely when management is production-focused. Production-oriented managers may emphasize scale, output, plant utilization, and operational expansion, sometimes without sufficient demand analysis. This can result in excess facilities, idle capacity, high fixed costs, inventory buildup, and reduced profitability. A marketing focus would normally begin with customer demand and market opportunity. A finance focus would emphasize return on investment, capital discipline, and cash flow. Diversification may create strategic risk, but it does not directly drive overbuilding in the same way as production orientation. Internal audit should evaluate whether capacity investments are supported by reliable forecasts, approved capital budgeting, sensitivity analysis, and post-implementation reviews. Therefore, Option C is correct.