To test whether a particular diversification move has good prospects for creating added shareholder value, corporate strategists should use the A. profit test, the competitive strength test, and the industry attractiveness test B. strategic fit test, the industry attractiveness test, and the dividend effect test C. barrier to entry test, the competitive advantage test, and the stock price effect test D. the industry attractiveness test, the cost-of-entry test, and the better-off test E. better-off test, the competitive advantage test, and the profit expectations test g

Question

Business

Grady Johns

14 May, 09:50

To test whether a particular diversification move has good prospects for creating added shareholder value, corporate strategists should use the A. profit test, the competitive strength test, and the industry attractiveness test B. strategic fit test, the industry attractiveness test, and the dividend effect test C. barrier to entry test, the competitive advantage test, and the stock price effect test D. the industry attractiveness test, the cost-of-entry test, and the better-off test E. better-off test, the competitive advantage test, and the profit expectations test g

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Rachael Sanford · Answer 1

The answer is option (d) the industry attractiveness test, the cost-of-entry test, and the better-off test.

Explanation:

Solution

The better-off test is important for diversification decisions. Better off test tells whether their is one time or continuous competitive advantage in some form due to diversification.

Industry attractiveness is important to access profitability and ability to win in the industry.

Cost to entry is important to access whether the firm has resources to invest in diversification.