Diversification Based on Transferring Competencies

question 37

Multiple Choice

Diversification based on transferring competencies

• A) requires the existence of significant commonalities between one or more of the value-creation functions.
• B) requires that acquisitions be made in the same industry as the company's core business area.
• C) allows a company to achieve the advantage of risk pooling.
• D) allows a company to reduce bureaucratic costs.
• E) requires both the existence of significant commonalities between one or more of the value-creation functions and that acquisitions be made in the same industry as the company's core business area.

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Definitions:

After Tax Cash Flow

The amount of cash that a business or individual has available after all tax obligations have been paid, indicating the net cash generated or used over a period.

Depreciated

The decrease in the value of an asset over time, often due to wear and tear or obsolescence.

Tax Rate

The percentage at which an individual or corporation is taxed, varying by income level, jurisdiction, and type of tax.

Net Present Value

A financial metric that calculates the worth of a projected stream of cash flows by discounting them back to their value in today's dollars.