Which of the following is an advantage of an acquisition as a means of entry into foreign markets?
A) It is much easier to change the culture of an existing organization than build a new organization.
B) It is easier to convert the operating routines of acquired units than establish routines in new subsidiaries.
C) It yields greater long-run returns than greenfield ventures.
D) It gives firms access to valuable intangible assets along with a set of tangible assets.
E) Acquired firms are often undervalued and hence assets can be purchased at minimal prices.

Question

Quizplus · Accepted Answer

An acquisition provides the acquiring firm access to valuable intangible assets such as brand names, customer relationships, and technology, along with tangible assets such as buildings and equipment. This can be advantageous for firms looking to quickly gain a foothold in foreign markets. Option A and B are not necessarily true, as changing organizational culture can be difficult and establishing routines in new subsidiaries can be done effectively with proper planning. Option C is not always true, as greenfield ventures can yield higher returns in certain situations. Option E is not a reliable advantage, as the value of an acquired firm is subject to market forces and may not always be undervalued.

Which of the Following Is an Advantage of an Acquisition