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

question 20

Multiple Choice

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

• A) the excess cash flows generated by cash cow businesses are sufficient to cover the negative cash flows of its cash hog businesses.
• B) a business adequately contributes to achieving the corporate parent's performance targets.
• C) the company has adequate financial strength to fund its different businesses and maintain a healthy credit rating.
• D) 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) 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:

Hydrothermal Vents

Openings in the sea floor that emit hot, mineral-rich water, supporting unique ecosystems that do not rely on sunlight for energy.

Pelagic Province

The ocean’s open waters.

Salt Content

The concentration of salt, particularly sodium chloride, in a given substance or environment.

Desert Soil

Soil found in arid regions, characterized by low organic matter, lack of moisture, and often high salinity levels.