Which One of the Following Is Not a Rationale for Retaining

question 56

Multiple Choice

Which one of the following is not a rationale for retaining a cash hog business in a diversified company's portfolio?

• A)Capital infusions needed from the corporate parent are modest relative to the funds available.
• B)There is a decent chance of growing the business into a solid bottom-line contributor.
• C)The business is in an industry with low attractiveness and has a weak competitive position in that industry.
• D)There is a better than even chance that investing in the cash hog will result in it becoming a star business with a strong or market-leading competitive position in a high growth market and high levels of profitability.
• E)The cash hog has a valuable strategic fit with other business units.

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Definitions:

Coke and Pepsi

Refers to a classic example of duopoly in economics, representing competition between two dominant firms in a market.

Perfect Complementarity

Refers to a situation in consumer choice theory where two goods are always consumed together in fixed proportions because one is perfectly complementary to the other.

Engel Curve

A graph showing the relationship between the income of a consumer and the amount of a good that the consumer buys, illustrating how spending on a good varies with income.

Left and Right Shoes

Items that are perfect complements in consumption, where the use of one without the other is generally considered incomplete or unsatisfactory.