For an Unrelated Diversification Strategy to Produce Financial Results Above

question 117

Multiple Choice

For an unrelated diversification strategy to produce financial results above that of stand-alone entities, executives must do all of the following EXCEPT

• A) diversify into businesses that can produce consistently good earnings and returns on investment and thereby satisfy the attractiveness test.
• B) negotiate favorable acquisition prices (to satisfy the cost of entry test).
• C) do a superior job of corporate parenting via high-level managerial oversight and resource sharing, financial resource allocation and portfolio management, or restructuring underperforming businesses (to satisfy the better-off test).
• D) satisfy the attractiveness test, the cost of entry test, and the better-off test.
• E) leverage the cross-business strategic fit advantage effectively.

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Definitions:

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