The Attractiveness Test for Evaluating Whether Diversification into a Particular

question 59

Multiple Choice

The attractiveness test for evaluating whether diversification into a particular industry is likely to build shareholder value involves determining whether

• A)conditions in the target industry allow for profits and return on investment that is equal to or better than that of the company's present business(es).
• B)the potential diversification move will boost the company's competitive advantage in its existing business.
• C)shareholders will view the contemplated diversification move as attractive.
• D)key success factors in the target industry are attractive.
• E)there are attractive strategic fits between the value chains of the company's present businesses and the value chain of the new business it is considering entering.

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Definitions:

Private Influence

Refers to the unseen or indirect control, impact, or guidance exerted by individuals or organizations in private sectors over public decisions, policy-making, or opinion.

American Foreign Policy

The strategies and decisions employed by the United States in its interactions with other nations, including diplomacy, military actions, and treaties, to achieve national objectives.

Corporations

Legal entities that are separate and distinct from their owners, which can own property, enter into contracts, and be sued or sue others.

Elites

Small groups of individuals or entities that hold a disproportionate amount of power, wealth, or privilege in society.