To test whether a particular diversification move has good prospects for creating added shareholder value, corporate strategists should use
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 attractiveness test, the cost of entry test, and the better-off test are commonly used to evaluate the potential for creating shareholder value through diversification. These tests assess whether the industry is attractive, whether the cost of entering the industry is justified, and whether the company will be better off after the diversification.

To Test Whether a Particular Diversification Move Has Good Prospects