Apple's $3 Billion Acquisition of Beats Electronics and Beats Music

question 92

Multiple Choice

Apple's $3 billion acquisition of Beats Electronics and Beats Music in 2014 was an attractive strategy option for entering promising new industries in headphones and streaming music services because it

• A)was an effective way to hurdle entry barriers, is usually quicker than trying to launch a brand-new startup operation, and allows the acquirer to move directly to the task of building a strong position in the target industry.
• B)was less expensive than launching a new startup operation, thus passing the cost of entry test.
• C)offered a challenging opportunity to train new resources and revive a sagging business even if does not offer great prospects for growth, profitability, or return on investment.
• D)was more likely to result in passing the shareholder value test, the profitability test, and the better-off test.
• E)offered the prospect of gaining an immediate competitive advantage in the new industry and thus helps ensure that the diversification move will pass the competitive advantage test for building shareholder value.

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Definitions:

Labor-intensive Industries

Sectors or businesses that require a large amount of labor to produce goods or services, as opposed to being heavily automated or equipment-oriented.

Availability

The extent to which a product or service is obtainable and ready for use by customers.

Cost of Labor

The total amount spent by businesses on employee wages, benefits, and payroll taxes.

Supply Chain Operation

The execution and management of activities involved in sourcing, procurement, conversion, and logistics management to produce and deliver goods or services.