Acquisition of an Existing Business Is an Attractive Strategy Option

question 33

Multiple Choice

Acquisition of an existing business is an attractive strategy option for entering a promising new industry because it

• A)is an effective way to hurdle entry barriers,is usually quicker than trying to launch a new start-up operation,and allows the acquirer to move directly to the task of building a strong position in the target industry.
• B)is less expensive than launching a new start-up operation,thus passing the cost-of-entry test.
• C)is a less risky way of passing the attractiveness test.
• D)is more likely to result in passing the shareholder value test,the profitability test,and the better-off test.
• E)offers 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:

National Labor Relations Act

A foundational United States labor law that protects the rights of employees to organize and to bargain collectively with their employers.

Employee Polygraph Protection Act

A United States federal law that generally prevents employers from using lie detector tests, either for pre-employment screening or during the course of employment, with certain exceptions.

Polygraph Tests

A method used to measure and record physiological indicators such as blood pressure, pulse, respiration, and skin conductivity while the subject answers a series of questions, purportedly to indicate truthfulness.

Labor Management Relations Act

A 1947 U.S. federal law aimed at regulating labor relations, addressing disputes between employers and employees.