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

question 12

Multiple Choice

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

• A) determining whether a newly entered business presents opportunities to cost-efficiently transfer competitively valuable skills or technology from one business to another.
• B) determining whether the cost to enter the target industry will strain the company's credit rating.
• C) considering whether 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) determining whether the cost to enter the target industry will raise or lower the company's total profits.
• E) determining whether the cost a company incurs to enter the target industry will raise or lower production costs.

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Definitions:

Appearance-Reality

A cognitive development concept referring to the ability to differentiate between what something appears to be and what it actually is.

Sociocultural Theory

Vygotsky’s theory that individuals acquire culturally relevant ways of thinking through social interactions with members of their culture.

Collaborating

The act of working together with one or more people to achieve a common goal or complete a task.

Memory Strategies

Techniques used to encode, retain, and retrieve information more effectively, enhancing the ability to remember and recall information.