External Expansion in Business
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Questions and Answers

What is external expansion?

  • Expanding only in the local market
  • Expanding within the existing business structure
  • Expanding by working with other businesses (correct)
  • Expanding through government grants

    • What is a merger?

  • When a firm buys more than half the shares in another firm
  • When two firms join together to form a new, larger firm (correct)
  • When a firm diversifies into new markets
  • When a firm takes over a competitor

    • Why does a firm take over a supplier according to the text?

  • To reduce economies of scale
  • To cut off the supply chain
  • To control the supply, cost, and quality of raw materials (correct)
  • To increase competition in the market

    • How does taking over a customer benefit a firm?

    <p>Gives the firm greater access to customers</p> Signup and view all the answers

    Which type of external expansion creates a firm with more economies of scale and a bigger market share?

    <p>Merger with a competitor</p> Signup and view all the answers

    What happens when two unrelated firms join together in external expansion?

    <p>Expansion by diversifying into new markets</p> Signup and view all the answers

    What did Kraft Foods Inc. achieve by buying Cadbury in 2010?

    <p>Became the largest seller of chocolate and confectionery in the world</p> Signup and view all the answers

    Why do less than half of all takeovers and mergers succeed?

    <p>Because it is challenging to integrate two different businesses successfully</p> Signup and view all the answers

    What may happen if a takeover bid is hostile and unpopular?

    <p>The takeover will create bad feelings and resistance among the stakeholders</p> Signup and view all the answers

    How do mergers and takeovers often lead to uncertainty among workers?

    <p>By implementing cost-cutting measures leading to job redundancies</p> Signup and view all the answers

    Which aspect can make it difficult for two firms to integrate after a merger or takeover?

    <p>Differing management styles and company cultures</p> Signup and view all the answers

    What is a common result of mergers and takeovers in terms of workforce?

    <p>Making lots of people redundant</p> Signup and view all the answers

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