Acquisitions to increase market power require that the firm have a ____ diversification strategy.
A) unrelated
B) related
C) dominant business
D) single business

Question

Quizplus · Accepted Answer

Acquisitions to increase market power require a related diversification strategy, meaning the firm expands into businesses that are related to its existing operations. This allows the firm to leverage synergies between the acquired businesses and its existing operations to generate cost savings and increase market power. Unrelated diversification (option A) involves expanding into businesses that are not related to the firm’s existing operations and may not provide the same synergy benefits. Dominant business (option C) refers to a situation where the firm derives more than 50% of its revenue from a single business, which is not relevant to this question. Single business (option D) refers to a situation where the firm operates in a single industry or market.

Acquisitions to Increase Market Power Require That the Firm Have