Before engaging in any diversification move, managers should make sure they give positive answers to the 'three tests for diversification':

the cost$-$leadership test, the differentiation test, and the focus test

the multidomestic test, the global test, and the transnational test

the industry attractiveness test, the cost$-$of$-$entry test, and the synergies test

the mergers test, the acquisitions test, and the joint ventures test