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The better-off test for evaluating whether a particular
diversification move is likely to generate added value for
shareholders involves - ANSWER-evaluating whether the
diversification move will produce a 1 + 1 = 3 outcome such
that the company's different businesses perform better
together than apart and the whole ends up being greater
than the sum of the parts.
, Which of the following statements about cross-business
strategic fit in a diversified enterprise is not accurate? -
ANSWER-Strategic fit is primarily a byproduct of unrelated
diversification and exists when the value chain activities of
unrelated businesses possess economies of scope and
good financial fit.
In companies pursuing a strategy of unrelated
diversification, - ANSWER-each business is on its own in
trying to build a competitive edge and the consolidated
performance of the businesses is likely to be no better
than the sum of what the individual businesses could
achieve if they were independent.