MBC Electronics is a strong-performing firm that has reported high profits in 10 consecutive quarters. Investors, however, see merit in a merge with a larger manufacturer to offset the competitive force of nation-wide chains. This merger is an example of a(n):
A)External expansion
B)Vertical integration
C)Internal expansion
D)Management integration

Question

Quizplus · Accepted Answer

This merger is an example of an external expansion.
Key Takeaway: Mergers and takeovers are considered external expansions. Companies engage in external expansion for a number of reasons including to become more competitive, to gain access to new markets, and to increase efficiency and lower overhead.

MBC Electronics Is a Strong-Performing Firm That Has Reported High