Question

In: Economics

firms use acquisition strategies to: Increase market power Overcome entry barriers to new markets or regions...

firms use acquisition strategies to:

  • Increase market power
  • Overcome entry barriers to new markets or regions
  • Avoid the costs of developing new products and increase the speed of new market entries
  • Reduce the risk of entering a new business
  • Become more diversified
  • Reshape their competitive scope by developing a different portfolio of businesses
  • Enhance their learning as the foundation for developing new capabilities

Think of College of business , Imagine they are to acquire another business. Answer the following:

1.What business should they acquire(could be an existing one or fictitious)?

2.Which of the above bullet-point strategies would explain/justify the acquisition?

Solutions

Expert Solution

Solution

1.Any business can acquire some businesses that are related to it.It is very important they do it because they can reap benefit(s) in the form of diversification of their income sources,synchronization benefits and also benefits from econoies of scope.

(Say) there exists a ficitious College,Humana College of Enginnering,which is presently functioning for profit.

Some of the different businesses it can acquire can be online classes (it can provide it's video lectures for a nominal fee to the global student community),it can acquire a consultancy that can provide advice to student about persuing higher studies in their own country and/or abroad , they can acquire the businesses whose products they are using on everyday basis like chalks,books manufacturing,presses,publications,etc.,

2.I would take one example from the above list of probable businesses that it can acquire - Acquiring the business that manufactures chalkpieces and/or other stationary.

The strategies that would majorly work out over here is :Reduce the risk of entering a new businesses and Become mre diversified.

Reasons:

- Since chalkpieces / and other stationary manufacturing is a high margin business and also that they themselves consume the end products in huge numbers on continuos so there will not be risk due to low sales and also they can reap the benfits of lower cost of these products as themselves are the manufacturers and also their supply is safeguarded.

Hope this solution helps!! Please give a "ThumbsUp" rating for the same!!


Related Solutions

Explain what language barrier is and list 3 strategies you could use to overcome these barriers:
Explain what language barrier is and list 3 strategies you could use to overcome these barriers:
Describe 3 potential barriers to EHR adoption and strategies to overcome those barriers. Support with 2...
Describe 3 potential barriers to EHR adoption and strategies to overcome those barriers. Support with 2 references/citations
1. Barriers to entry enhance the market power of many business organizations because they make it...
1. Barriers to entry enhance the market power of many business organizations because they make it difficult for would-be competing firms to enter into an established market. Describe each of the government barriers to entry set forth below:      a. Patents      b. Regulations      c. Business Taxes 1A. What are some basic economic pros and cons of government regulation? 2. With your MBA in hand from Indiana Tech University and a few years of experience under your belt, you...
1. Barriers to entry enhance the market power of many business organizations because they make it...
1. Barriers to entry enhance the market power of many business organizations because they make it difficult for would-be competing firms to enter into an established market. Describe each of the government barriers to entry set forth below:      a. Patents      b. Regulations      c. Business Taxes 1A. What are some basic economic pros and cons of government regulation? 2. With your MBA in hand from Indiana Tech University and a few years of experience under your belt, you...
6. Firms entering monopolistic competitive markets face strong barriers to entry True False 7. If a...
6. Firms entering monopolistic competitive markets face strong barriers to entry True False 7. If a monopolistically competitive firm can earn a profit, it will adjust production quantity until MR = MC. True False 8. A monopolistic competitive firm identifies that it is producing at an output level at which it's marginal revenue is greater than it's marginal cost. This firm should decrease quantity produced and increase price to increase profit or reduce losses. True False 9. In the short-run,...
Explain how barriers to entry created by high-tech firms differ from barriers to entry created by...
Explain how barriers to entry created by high-tech firms differ from barriers to entry created by traditional manufacturing industries such as steel and automobiles.
How do firms use horizontal, vertical, and related types of acquisitions to increase their market power?
How do firms use horizontal, vertical, and related types of acquisitions to increase their market power?
How do firms use horizontal, vertical, and related types of acquisitions to increase their market power?...
How do firms use horizontal, vertical, and related types of acquisitions to increase their market power? Provide an example of a company that has used multiple types of acquisitions to increase its market power and describe how the firm is now a greater competitor in the market as a result. Cite any sources used to support your answer.
Implications of low barriers to entry in competitive market
Implications of low barriers to entry in competitive market
1) Entry of new firms into a perfectly competitive market lowers the profits of the existing firms.
True or false1) Entry of new firms into a perfectly competitive market lowers the profits of the existing firms.2) The airline and trucking industries are two examples of industries that were regulated becausethey were natural monopolies.3) One way that government can encourage the production of goods or services that haveexternal benefits is to subsidize the good or service.4) Because of free riders, a private, unregulated market would not produce the efficient quantityof a public good.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT