a cash cow business produces large internal cash flows over and above what is needed to build and maintain the business whereas the internal cash flows of a cash hog business are too small to fully fund its operating needs and capital requirements.
What are the two important pitfalls of an unrelated diversification strategy?
The two biggest drawbacks or disadvantages of unrelated diversification are: Demanding managerial requirements and limited competitive advantage potential.
Which of the following is an example of unrelated diversification?
This is a good example of unrelated diversification, which occurs when a firm enters an industry that lacks any important similarities with the firm’s existing industry or industries. Luckily for Coca-Cola, its investment paid off—Columbia was sold to Sony for $3.4 billion just seven years later.
What is the fundamental goal of calculating competitive strength scores for each of a diversified company’s business units?
The basic purpose of calculating competitive strength scores for each of a diversified company’s business units is to use the competitive strength scores as a means of: a. ranking each business unit from best to worst in terms of their resource strengths, competencies, and competitive capabilities.
Why do companies decide to enter a market?
Why do companies decide to enter a market? A. To capture economies of scale in product development, manufacturing, or marketing. To concentrate risk within a broader base of countries, especially when sales are down in one area and the company can undermine sales elsewhere.
Which of the following is the most compelling reason for diversifying into a new business?
There are four most often cited reasons for diversification: the internal capital market, agency problems, increased interest tax shield and growth opportunities.
What makes related diversification an attractive strategy?
What makes related diversification an attractive strategy is. the opportunity to convert cross-business strategic fits into a competitive advantage over business rivals whose operations do not offer comparable strategic-fit benefits. A diversified company’s business units exhibit good resource fit when.
Which of the following are key indicators of industry attractiveness?
Key Indicators of Industry Attractiveness
- Social, political, regulatory, environmental factors.
- Seasonal and cyclical factors.
- Industry uncertainty and business risk.
- Market size and projected growth rate.
- Industry profitability.
- The intensity of competition among market rivals.
- Emerging opportunities and threats.
Which is the best definition of operating cash flow?
Operating cash flow (OCF) is a measure of the amount of cash generated by a company’s normal business operations. Operating cash flow indicates whether a company can generate sufficient positive…
Where does investing and financing go on a statement of cash flows?
Any investing and financing transactions are excluded from operating cash flows section and reported separately, such as borrowing, buying capital equipment, and making dividend payments. Operating cash flow can be found on a company’s statement of cash flows, which is broken down into cash flows from operations, investing, and financing.
Which is an example of a direct method of cash flow?
Examples of the direct method of operating cash flow include: 1 Salaries paid out to employees 2 Cash paid to vendors and suppliers 3 Cash collected from customers 4 Interest income and dividends received 5 Income tax paid and interest paid
How does depreciation affect operating cash flow statement?
The difference results from depreciation expense of $150 million, an increase in accounts receivable of $50 million, and a decrease in accounts payable of $50 million. It would appear on the operating cash flow section of the cash flow statement in this manner:
