If Entry Barriers Are Low and the Industry Is Populated

question 86

Multiple Choice

If entry barriers are low and the industry is populated by small firms,internal development may be the preferred mode of entry.But if entry barriers cannot be overcome readily,then the only feasible entry route may be through a(n) :

• A) acquisition of a well-established company.
• B) acquisition and joint venture,although the former is more an uncertain choice due to a lack of industry experience the company has.
• C) joint venture,because it calls for sharing the risks.
• D) acquisition entry because the acquiring firm constrains the barriers to entry.
• E) joint venture since the firm can gain valuable industry experience.

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Definitions:

Balance Sheet

A document that outlines a firm's assets, liabilities, and the equity held by shareholders, as of a certain date.

Stockholders' Equity

The portion of a company's capital that belongs to the shareholders, calculated as total assets minus total liabilities.

Stockholders' Equity

Stockholders' equity represents the ownership interest in a company, calculated as total assets minus total liabilities.

Liabilities

Financial obligations or debts a company owes to others, which must be paid back in the future.