The Cost-Of-Entry Test for Evaluating Whether Diversification into a Particular

question 75

Multiple Choice

The cost-of-entry test for evaluating whether diversification into a particular industry is likely to build shareholder value involves

• A) determining whether a newly entered business presents opportunities to cost-efficiently transfer competitively valuable skills or technology from one business to another.
• B) determining whether the cost to enter the target industry will strain the company's credit rating.
• C) considering whether a company's costs to enter the target industry are low enough to allow for good profits or so high that potential profits would be eroded.
• D) determining whether the cost to enter the target industry will raise or lower the company's total profits.
• E) determining whether the cost a company incurs to enter the target industry will raise or lower production costs.

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Definitions:

Shared Values

Common beliefs, principles, or standards held by a group, organization, or society that guide behavior and decision-making.

Detailed Stories

Narratives or accounts that provide an in-depth and comprehensive description of events or experiences.

Independent Variable

The variable that is manipulated or changed in an experiment to see if it has an effect on another variable.

Dependent Variable

In research, it's the variable being tested and measured, assumed to be affected by the independent variable.