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

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 low enough to allow for good profits or so high that potential profits will be 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.