You Have Been Hired as a Consultant by Mary Dillon

question 41

Multiple Choice

You have been hired as a consultant by Mary Dillon, CEO of Ulta Beauty, a $5.9 billion company that is the largest U.S. retailer of cosmetics. CEO Dillon has asked you to consider several related diversification options for Ulta based on the potential for good resource fits. You would advise CEO Dillon that a company pursuing related diversification exhibits resource fit when

• A)each new line of business for Ulta could become a cash cow.
• B)each new line of business for Ulta would add to a company's overall resource strengths and have matching resource requirements and/or could do so when Ulta has adequate corporate resources to support its business needs and add sufficient value.
• C)each new line of business for Ulta could become sufficiently profitable to generate an attractive return on invested capital.
• D)each new line of business for Ulta could generate large internal cash flows over and above what is needed to build and maintain the business.
• E)the resource requirements of each new line of business for Ulta could be synergistic with the company's available resources.

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Definitions:

Renunciation

The formal or explicit declaration that one refuses to carry out, or is withdrawing from, an agreement or obligation.

Termination

The act of ending something, such as a contract, employment, or agreement, either by mutual consent or unilaterally by one party.

Permanent Loss

A situation where an asset loses value indefinitely, often due to fundamental changes in its market or condition.

Specified Result

A defined outcome or objective that a project or plan is intended to achieve.