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 determining whether

A) a newly entered business presents opportunities to cost-efficiently transfer competitively valuable skills or technology from one business to another.
B) the cost to enter the target industry will strain the company's credit rating.
C) a company's costs to enter the target industry are so high that the potentials for good profitability and return on investment erode.
D) the cost to enter the target industry will raise or lower the company's total profits.
E) the cost a company incurs to enter the target industry will raise or lower production costs.