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.