To test whether a particular diversification move has good prospects for creating added shareholder value, corporate strategists should use the
A)profit test, the competitive strength test, the industry attractiveness test, and the capital gains test.
B)better-off test, the competitive advantage test, the profit expectations test, and the shareholder value test.
C)barrier-to-entry test, the competitive advantage test, the growth test, and the stock price effect test.
D)strategic fit test, the industry attractiveness test, the growth test, the dividend effect test, and the capital gains test.
E)attractiveness test, the cost of entry test, and the better-off test.

Question

Quizplus · Accepted Answer

The correct answer is E) attractiveness test, the cost of entry test, and the better-off test. These tests evaluate whether the diversification will make the company more competitive and valuable. The attractiveness test assesses the industry's potential, the cost of entry test evaluates the investment needed, and the better-off test determines if the diversification will improve the company's overall position.

To Test Whether a Particular Diversification Move Has Good Prospects