To Test Whether a Particular Diversification Move Has Good Prospects

question 60

Multiple Choice

To test whether a particular diversification move has good prospects for creating added shareholder value,corporate strategists should use

• A) the profit test,the competitive strength test,and the industry attractiveness test.
• B) the better-off test,the competitive advantage test,and the profit expectations test.
• C) the barrier to entry test,the competitive advantage test,and the stock price effect test.
• D) the strategic fit test,the industry attractiveness test,and the dividend effect test.
• E) the attractiveness test,the cost-of-entry test,and the better-off test.

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Definitions:

Pairwise Voting

A voting system where choices are compared to each other in pairs, with voters selecting one option over the other in each pair.

Budget Shortage

A financial situation in which an entity’s expenditures exceed its revenues over a particular period of time, leading to a deficit that must be addressed by borrowing, spending cuts, or tax increases.

Market Wage

The prevailing rate of pay for work or labor, determined by the supply and demand for labor in the job market.

Transitive Preferences

In decision-making, the condition where if an individual prefers option A to option B and option B to option C, then they also prefer option A to option C.