Which of the Following Does Not Accurately Describe Entering a New

question 38

Multiple Choice

Which of the following does not accurately describe entering a new business via acquisition,internal development,or a joint venture?

• A)Acquisition is generally the most profitable way to enter a new industry,tends to be more suitable for an unrelated diversification strategy than a related diversification strategy,and usually requires less capital than entering an industry via internal start-up.
• B)Acquisition is the most popular means of diversifying into another industry,has the advantage of being quicker than trying to launch a brand-new operation,and offers an effective way to hurdle entry barriers.
• C)The big dilemma of entering an industry via acquisition of an existing company is whether to pay a premium price for a successful company or to buy a struggling company at a bargain price.
• D)The big drawbacks to entering a new industry via internal development include the costs of overcoming entry barriers,building an organization from the ground up,and the extra time it takes to build a strong and profitable competitive position.
• E)Joint ventures are an attractive way to enter new businesses when the opportunity is too complex,uneconomical,or risky for one company to pursue alone,when the opportunities in a new industry require a broader range of competencies and know-how than a company can marshal on its own,and/or when it aids entry into a foreign market.

---

Definitions:

Veto Power

The authority possessed by a person or body to unilaterally stop or reject a legislative act or decision.

Congress

The national legislative body of the United States, consisting of two houses: the Senate and the House of Representatives.

Legislation

The act of making or enacting laws. It is the process through which legislatures create statutes and regulations.

Elected President

An individual who has been chosen by voters to hold the presidential office in a democratic system of government.