PepsiCo Divested Its Group of Fast-Food Restaurant Businesses (KFC, Pizza

question 28

Multiple Choice

PepsiCo divested its group of fast-food restaurant businesses (KFC, Pizza Hut, and Taco Bell) to Yum! Brands in order to allow PepsiCo to focus on its core soft drink and snack-food businesses. A useful guide to determine whether or when to divest a business subsidiary is to ask,

• A)"Have we missed the opportunity to milk these cash cows?"
• B)"If we were not in this business today, would we want to get into it now?"
• C)"Can't we derive a parenting advantage with these businesses?"
• D)"Do we need to do the math to achieve 1 + 1 = 3 outcomes from these diversified businesses?"
• E)"Will these three businesses pass the 'cost-of-exit' test?"

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Definitions:

Interest Rates

The cost of borrowing money or the return on investment for savings and loans, influencing economic activity by affecting consumer spending and business investments.

Demand For Capital

refers to the desire for investment in physical goods, technology, or equipment that can be used to produce other goods or services.

Derived Demand

The demand for a good or service that arises from the demand for another good or service, such as the demand for steel being derived from the demand for cars.

Productivity Of Labor

The measure of the output of goods and services produced by labor input, indicating the efficiency of labor use.