Internal Competition for Corporate Resources Is Effective for Companies with an Unrelated

question 6

True/False

Internal competition for corporate resources is effective for companies with an unrelated diversification strategy, but dysfunctional for companies with a related constrained strategy.

---

Definitions:

Incremental Value

The additional value generated by taking a specific action, such as implementing a project, over the base case without taking the action.

Equity-Financed

Describes projects or purchases funded through the issuance of equity or shares, rather than debt.

Incremental Value

The additional or extra value generated by undertaking a new project or action, calculated as the difference in total value with and without the project.

Net Present Value

A method used in capital budgeting to evaluate the profitability of an investment, calculated by discounting future cash flows to the present value.