The Attractiveness Test for Evaluating Whether Diversification into a Particular

question 45

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 viewed 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:

Federal Court

A branch of the country's court system that deals with disputes involving federal law or the constitution.

Class Action

A legal proceeding in which one or several plaintiffs bring a lawsuit on behalf of a larger group of people with similar claims.

Group Action

A legal proceeding where a group of people collectively bring a claim to court, also known as a class action lawsuit.

Coordinated Effort

A collaborative action where individuals or groups work together towards a common goal or objective.