The Tests of Whether a Diversified Company's Businesses Exhibit Resource

question 3

Multiple Choice

The tests of whether a diversified company's businesses exhibit resource fit do NOT include:

• A) whether the excess cash flows generated by cash cow businesses are sufficient to cover the negative cash flows of its cash hog businesses.
• B) whether a business adequately contributes to achieving the corporate parent's performance targets.
• C) whether the company has adequate financial strength to fund its different businesses and maintain a healthy credit rating.
• D) whether the corporate parent has sufficient cash to fund the needs of its individual businesses and pay dividends to shareholders without having to borrow money.
• E) whether the corporate parent has or can develop sufficient resource strengths and competitive capabilities to be successful in each of the businesses it has diversified into.

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Definitions:

Several Decades

A period of many years, often used to describe a long time frame in history or a person’s life.

Grey Matter

Brain tissue that contains most of the brain's neuronal cell bodies and is involved in muscle control, sensory perception, and decision making.

Dendrites

The branched extensions of a neuron that receive signals from other neurons.

Big Brain

This term colloquially refers to having high intelligence or great cognitive abilities, although it's not a formal psychological or neurological term.