Which Is Not One of the Four Conditions That Make

question 26

Multiple Choice

Which is not one of the four conditions that make an internal start-up strategy appealing?

• A) When creating an internal start-up is cheaper than making an acquisition
• B) When adding new production capacity will adversely impact the supply-demand balance in the local market
• C) Having the ability to gain good distribution access
• D) Having scale economies to compete against local rivals
• E) All of these

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Definitions:

Sunk Cost

Expenses that have been paid and cannot be retrieved, and therefore, should not impact upcoming business strategies.

Opportunity Cost

The benefit foregone by choosing one alternative over another.

Financing Costs

Expenses incurred by an entity in borrowing funds, including interest, fees, and other charges associated with the issuance of debt.

Incremental Cash Flow

The additional cash flow generated by a company from a new project or investment, after accounting for expenses.