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.

---

Definitions:

Anti-globalization

A movement or sentiment against the process of international integration arising from the interchange of world views, products, ideas, and other aspects of culture.

Glocalization

The process of reflecting and adapting global practices to fit local needs, customs, and environments, blending global and local perspectives.

Modernization Theory

A theory suggesting that societies progress through similar stages of development towards becoming modern societies, characterized by industrialization, urbanization, and increased living standards.

Dependency Theory

A sociological theory proposing that resources flow from a "periphery" of poor and underdeveloped states to a "core" of wealthy states, enriching the latter at the expense of the former.