A Company Can Best Accomplish Diversification into New Industries By

question 80

Multiple Choice

A company can best accomplish diversification into new industries by:

• A) outsourcing most of the value chain activities that have to be performed in the target business/industry.
• B) acquiring a company already operating in the target industry,creating a new business subsidiary to compete in the target industry,or forming a joint venture with another company to enter the target industry.
• C) integrating forward or backward into the target industry.
• D) shifting from a strategic group comprised mostly of single-business companies to a strategic group comprised of diversified companies.
• E) employing an offensive strategy with new product innovation as its centerpiece.

---

Definitions:

Capital Rationing

The process of selecting the most profitable projects to invest in when a company has limited resources or capital available.

Present Value

The present value of anticipated future cash flows or sums of money, calculated with a given rate of earnings.

Net Cash Flow

The difference between a company's cash inflows and outflows during a specific period, providing insight into its financial health and liquidity.

Internal Rate Of Return

The discount rate at which the net present value of all the cash flows from an investment equal zero.