The Three Tests for Judging Whether a Particular Diversification Move

question 22

Multiple Choice

The three tests for judging whether a particular diversification move can create value for shareholders are the

• A)industry attractiveness test,the profitability test,and the shareholder value test.
• B)strategic fit test,the competitive advantage test,and the return on investment test.
• C)resource fit test,the profitability test,and the shareholder value test.
• D)attractiveness test,the cost-of-entry test,and the better-off test.
• E)shareholder value test,the cost-of-entry test,and the profitability test.

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Definitions:

Inflation Rate

The percentage rate at which the general level of prices for goods and services is rising, eroding purchasing power over time.

Unemployment Rate

The percentage of the labor force that is jobless and actively seeking employment, serving as a key indicator of labor market performance.

Mass Production

The manufacturing of large quantities of standardized products, often using assembly lines or automated technologies.

Mass Consumption

A pattern of economic growth where a large portion of the population engages in the purchase and consumption of goods and services in significant quantities.