The Better-Off Test for Evaluating Whether a Particular Diversification Move

question 32

Multiple Choice

The better-off test for evaluating whether a particular diversification move is likely to generate added value for shareholders involves assessing whether the move will

• A)make the company better off because it will produce a greater number of core competencies.
• B)make the company better off by improving its balance sheet strength and credit rating.
• C)make the company better off by spreading shareholder risks across a greater number of businesses and industries.
• D)produce a synergistic outcome such that the company's different businesses perform better together than apart and the whole ends up being greater than the sum of the parts.
• E)help each business earn exactly what they were earning before coming under the same corporate umbrella.

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Definitions:

Wrinkles

Lines or creases in the skin, often resulting from aging, loss of elasticity, or exposure to sun.

Brain

The complex central organ of the nervous system, enclosed within the skull, functioning as the primary receiver, organizer, and distributor of information for the body.

Myelin

A fatty substance that surrounds and insulates the axons of many neurons, enhancing the speed and efficiency of electrical signal transmission in the nervous system.

Insulates

Refers to the process or material used to prevent the transfer of heat, electricity, or sound from one area to another.