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

question 67

Multiple Choice

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

• A) a newly entered business presents opportunities to cost-efficiently transfer competitively valuable skills or technology from one business to another.
• B) the cost to enter the target industry will strain the company's credit rating.
• C) a company's costs to enter the target industry are so high that the potentials for good profitability and return on investment are eroded.
• D) the cost to enter the target industry will raise or lower the company's total profits.
• E) the cost a company incurs to enter the target industry will raise or lower production costs.

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Definitions:

Team Innovation

The process by which novel ideas, products, or solutions are generated through collaborative efforts within a team.

Organizational Effectiveness

Refers to how efficiently and effectively an organization meets its goals and satisfies its stakeholders.

Structural Holes

refer to gaps between nodes in social networks, where the absence of direct ties between two parts of a network can create opportunities for information brokerage.

Organizational Divides

Structural, cultural, or communicational barriers within an organization that hinder collaboration and efficiency across departments or teams.