Firms should pursue merger and acquisition strategies only to obtain valuable economies of scope that outside investors find too costly to create on their own.

Question

Quizplus · Accepted Answer

Pursuing merger and acquisition strategies can be beneficial if it leads to valuable economies of scope that outside investors find too expensive to create. This can help the firm gain a competitive advantage and create value for shareholders. However, if a firm pursues mergers and acquisitions solely for the purpose of growth without considering the potential economies of scope, it may not lead to long-term success. Therefore, firms should evaluate the potential benefits of mergers and acquisitions before pursuing such strategies.

Firms Should Pursue Merger and Acquisition Strategies Only to Obtain