Acquisitions enable firms to ________.
A) enter new businesses slowly and methodically
B) increase the risks entailed by the process of starting new businesses internally
C) rapidly reach minimum efficient scale
D) increase the time associated with entering a new market

Question

Quizplus · Accepted Answer

Acquisitions allow firms to rapidly reach minimum efficient scale by gaining access to existing resources and capabilities of the acquired company, rather than slowly building them up through internal development. This can result in cost savings and increased efficiency for the acquiring firm. Option A is incorrect because acquisitions can actually enable firms to enter new businesses more quickly than if they were starting from scratch. Option B is incorrect because acquisitions can also entail significant risks and uncertainties, such as cultural clashes and integration challenges. Option D is incorrect because acquisitions can actually reduce the time associated with entering a new market, since the acquiring company can immediately gain access to the target company's customer base and distribution channels.

Acquisitions Enable Firms to ________