The Industry Attractiveness Test for Evaluating Whether Diversification into a Particular

question 90

Multiple Choice

The industry attractiveness test for evaluating whether diversification into a particular industry is likely to build shareholder value involves determining whether:

• A) conditions in the target industry are sufficiently attractive to permit earning consistently good or better profits and returns on investment than that of the company's present business(es).
• B) the potential diversification move will boost the company's competitive advantage in its existing business.
• C) shareholders will view the contemplated diversification move as attractive.
• D) key success factors in the target industry are attractive.
• E) there are attractive strategic fits between the value chains of the company's present businesses and the value chain of the new business it is considering entering.

---

Definitions:

Avoidance Response

A behavior aimed at evading a specific stimulus or situation perceived as unpleasant or threatening.

Phobia

An extreme or irrational fear or aversion to specific objects, scenarios, or situations, significantly impacting a person's life.

Unconditioned Stimulus

A stimulus that naturally and automatically triggers a response without any prior learning.

Conditioned Stimulus

A stimulus that was originally neutral but, upon being paired with an unconditioned stimulus, prompts a conditioned reaction.