BUAD441 Chapter Notes - Chapter 8: Cash Cow, Cash Flow, Capital Market

• School: University of Delaware
• Department: Business Administration
• Course: BUAD441
• Professor: Sharon Watson

Document Summary

Managers in a one-business company come up with a plan for competing successfully in only a single industry environment. Achieve profitable growth no urgency to pursue diversification. Growth can become limited if industry becomes competitively unattractive. Diversifying into new industries always merits strong consideration whether a single-business company encounters diminishing market opportunities and stagnating sales in its principal business. Diversification can"t be considered a success unless it adds. Must offer an opportunity for profits and roi that"s equal to or better than that of the company"s present business(es: cost of entry test. Cost to enter the target industry must not be so high as to erode the potential for good profitability. More attractive the prospects more expensive to enter: better off test. Offer potential for company"s existing businesses and new business to perform better together under a single corporate umbrella than independently. + offers effective way to hurdle entry barriers.