Question

Tests to apply in deciding whether diversification will create shareholder value:

A. Market Attractiveness Test
B. Cost of Entry Test
C. Competitive Advantage Test
D. All of the Above

Answer 1

The tests to apply in deciding whether diversification will create shareholder value are the Market Attractiveness Test, Cost of Entry Test, and Competitive Advantage Test.D. All of the Above

Step-by-step explanation:

The tests to apply in deciding whether diversification will create shareholder value are:

1. Market Attractiveness Test: This test assesses the attractiveness of the market in terms of potential growth, profitability, and stability.
2. Cost of Entry Test: This test evaluates the costs associated with entering a new market, including investment, operational expenses, and competitive pressures.
3. Competitive Advantage Test: This test examines the company's existing competitive advantage and how it can be leveraged in new markets.

All of the above tests are important in assessing the potential value creation from diversification.