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External Growth Methods

Quiz by Paul Adams

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10 questions
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  • Q1
    A distinguishing feature of a joint venture is that:
    Joint ventures are significantly less risky than takeovers
    Risks and rewards are shared by the parties
    The joint venture business cannot be sold
    Both parties to the joint venture share the profits equally
    30s
  • Q2
    The most likely reason for the takeover by a leading supermarket chain of a close competitor would be:
    To increase buying power of suppliers
    To spread risk by diversification
    To secure better distribution
    To increase market share
    30s
  • Q3
    Which of the following is most likely to result in greater economies of scale?
    Merger of two startup online businesses
    Takeover of a small wholesaler by a large retailer
    Merger of two leading hotel chains
    Takeover by a UK retailer of a retailer in China
    30s
  • Q4
    A business acquiring control of another. This is known as a:
    Takeover
    Merger
    Joint Venture
    External investment
    30s
  • Q5
    The takeover by a supermarket chain of a key supplier is an example of:
    Forward vertical integration
    Conglomerate integration
    Backward vertical integration
    Horizontal integration
    30s
  • Q6
    The likely drawback of internal growth compared with external growth is:
    Growth will be riskier using internal methods
    Growth will be slower using internal methods
    Growth will be faster using internal methods
    Growth will be riskier using external methods
    30s
  • Q7
    Which one of the following is an example of an external method of growth?
    A franchisor expands the product range
    A franchisee opens a new location nearby
    A franchisor increases the rate of royalty payments due from franchisees
    A franchisor buys the business of its largest franchisee
    30s
  • Q8
    Conglomerate integration is closely linked with the strategy of:
    Cost leadership
    Market penetration
    Differentiation
    Diversification
    30s
  • Q9
    Which of these is an example of horizontal integration?
    Takeover of a manufacturer by a retailer
    Merger of two competing manufacturers
    Takeover of a raw material supplier by a manufacturer
    Joint venture between an online retailer and supplier
    30s
  • Q10
    A key reason why takeovers often fail is that:
    Competitors increase prices as a result of the takeover
    Achieved cost saving are lower than expected
    Competitors lose customers to the business
    Achieved cost savings are greater than expected
    30s

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