Business diversieatien stands little ehanee ef building shareholder value witheut passing the fellewing three tests The industgr attractiveness
Business diversieatien stands little ehanee ef building shareholder value witheut passing the fellewing three
Business diversieatien stands little ehanee ef building shareholder value witheut
little ehanee ef building shareholder value witheut passing the fellewing three tests The industgr attractiveness
Business diversieatien stands little ehanee ef building shareholder value
witheut passing the fellewing three tests The industgr attractiveness
Business diversieatien stands little ehanee ef building
Business diversieatien stands
Business diversieatien stands little ehanee ef building shareholder value witheut passing the fellewing three tests: The industgr attractiveness...

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Can you describe a situation where a company made a decision to diversify? What type of diversification was it? Did it pass the three tests of building shareholder value? Your task will be to find a company that has diversified and discuss whether the move was related or unrelated diversification. Also, did the diversification move pass the three tests of building shareholder value (page 155)? Also, how did the diversification turn out? Was it a net positive for the company, a negative, or is the jury still out on the outcome? ATTACHMENT PREVIEW Download attachment Screen Shot 2017-11-22 at 12.37.28 PM.png Business diversi?eatien stands little ehanee ef building shareholder value witheut passing the fellewing three tests:3 1. The industgr attractiveness test. The industry te be entered threugh diversifieatien must ei'ier an eppertunity fer prefits and return en investment that is equal te er better than that ef the eempany‘s present businessles}. 2. The eesf—ef—enhy test. The eest te enter the target industry must net be se high as te erede the petential fer geed preiitability. A eateh-EE ean prevail here. hewever. The mere attractive an industry's prespeets are fer grewth and gee-d leng-term prefitehility, the mere expensive it ean be te enter. It's easy fer aeeuisitiens el eempanies in highly attraetive industries te fail the eest—ei—entry test. 3. The better-eff lest. Diversii'ying inte a new business must efler petential fer the eem pany's existing businesses and the new business te perierm better tegether under a single eerperate umbrella than they weuld perierm eperating as independent, stand-alene businesses. Fer example, let's say eempany A diversities by purehasing eem pany E in enether industry. If A and B's eenselidated prefits in the years te eerne preve ne greater than what eaeh eeuld have earned en its ewn. then A‘s diversifieatien wen‘t previde its sharehelders with added value. Gempany A‘s sharehelders eeuld have aehieved the same 1 + 1 = E resuit by merely purchasing steel: in eempany E. Sharehelder value is net ereated by diversifieatien unless it preduees a1 + 1 =3 ei'ieet.

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Business diversieatien stands little ehanee ef building shareholder value witheut passing the fellewing three tests: The industgr attractiveness...