When a Company Decides to Expand into New Industries, It

question 41

Multiple Choice

When a company decides to expand into new industries, it must:

• A)develop "multibusiness model" that justifies its entry into different businesses.
• B)halt marketing activities in the current industry to avoid being associated with one specific industry.
• C)select a new CEO and reappoint the board of directors.
• D)create one common business model for all the industries rather than each business unit.
• E)avoid talking about ways of increasing profitability in the business model.

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Definitions:

Retained Earnings Statement

A financial statement that outlines the changes in retained earnings for a company over a specific period.

Owners' Equity

The residual interest in the assets of an entity after deducting liabilities, representing the ownership interest of the shareholders.

Net Income

The total earnings of a company after subtracting all expenses and losses from total revenue.

Return on Equity

A financial ratio that measures the profitability of a business in relation to the equity held by the shareholders.