1. What are the pros and cons of using strategic alliances to try to enhance a company's ability to compete in foreign markets?
2. Identify and briefly discuss each of the three tests for determining whether diversification into a new business is likely to build shareholder value.
3. The attractiveness test is the most important test for determining whether diversification into a new business is likely to result in 1 + 1 = 3 increases in shareholder value (as opposed to simply a 1 + 1 = 2 type of increase). True or false? Justify and explain your answer.
4. Explain the relevance of the following as they relate to building shareholder value via diversification:
a. the industry attractiveness test
b. the cost-of-entry test
c. the better-off test
5. Carefully explain the difference between and the rationale for selecting a strategy of related diversification and/or a strategy of unrelated diversification
6. Which is the better approach to diversification-a strategy of related diversification or a strategy of unrelated diversification? Explain and support your answer.
7. What is meant by the term strategic fit? What are the advantages of pursuing strategic fit and matchups in choosing which industries to diversify into?