Assume a well-established firm is operating at high levels of efficiency and profitability.A group of recent college grads recently opened a new firm in the same industry.The well-established firm might be interested in acquiring the new firm primarily to:
A)reduce economies of scale.
B)use the established firm's tax losses.
C)transfer technology knowledge.
D)obtain the new firm's surplus funds.
E)control the production of purchased component parts.

Question

Quizplus · Accepted Answer

The well-established firm might be interested in acquiring the new firm primarily to transfer technology knowledge. Even if the established firm is operating well, it can benefit from acquiring new technology or innovations from the new firm. This can give the established firm a competitive advantage in the long term. The other options do not seem to apply to this scenario.

Assume a Well-Established Firm Is Operating at High Levels of Efficiency