The fastest and easiest way for a firm to diversity its portfolio of businesses is through acquisition because
A)of barriers to entry in many industries.
B)it is difficult and time intensive for companies to develop products that differ from their current product line.
C)innovation in both the acquired and the acquiring firm is enhanced by the exchange of competencies resulting ᶠʳᵒᵐ ᵃᶜqᵘᶦˢᶦᵗᶦᵒⁿ.
D)unrelated acquisitions are usually uncomplicated because the acquired firm is allowed to continue to function independently as it did before acquisition.

Question

Quizplus · Accepted Answer

Acquiring another company allows a firm to quickly enter new markets and diversify its product line without having to develop new products from scratch, which can be time consuming and difficult. This is particularly true in industries with high barriers to entry. While acquisitions can result in enhanced innovation through the exchange of competencies, unrelated acquisitions may not be as simple as allowing the acquired firm to continue functioning independently, as there may be integration challenges and cultural differences to navigate.

The Fastest and Easiest Way for a Firm to Diversity