Assignment:
1. The most popular strategy for entering new businesses and accomplishing diversification is
- forming a joint venture with another company to enter the target industry.
- internal startup.
- acquisition of an existing business already in the chosen industry.
- forming a strategic alliance with another company to enter the target industry.
- None of these-strategic alliances and joint ventures are equally popular and rank well ahead of acquisition and internal start-up in terms of frequency of use.
2. Internal development of a new business subsidiary can be a more attractive means of entering a desirable new business than is acquiring an existing firm already in the targeted industry when
- the company has ample time and adequate resources to launch the new internal start-up business from the ground up.
- there is a large pool of desirable acquisition candidates.
- the target industry is growing rapidly and good joint venture partners are available.
- all of the potential acquisition candidates are losing money.
- the target industry is comprised of several relatively large and well-established firms.
3. A joint venture is an attractive way for a company to enter a new industry when
- the pool of attractive acquisition candidates in the target industry is relatively small.
- it needs better access to economies of scope in order to be cost-competitive.
- the industry is growing slowly and adding too much capacity too soon could create oversupply conditions.
- the firm has no prior experience with diversification and the industry is on the verge of stagnant growth.
- the opportunity is too risky or complex for a company to pursue alone, a company lacks some important resources or competencies and needs a partner to supply them, and/or a company needs a local partner in order to enter a desirable business in a foreign country.