Test: Enterprise Growth Strategies- 2 - Commerce MCQ

• A merger typically occurs when one company purchases another company by buying a certain amount of its stock in exchange for its own stock. Typically, the share price of the company being bought will increase as goodwill is taken into consideration in the purchase price.
• Mergers combine two separate businesses into a single new legal entity. Unlike mergers, acquisitions do not result in the formation of a new company. Instead, the purchased company gets fully absorbed by the acquiring company. Sometimes this means the acquired company gets liquidated.

MNC franchise: It provides entrepreneurs a low-risk opportunity to co-own a business with a proven format for success. In addition, franchising provides opportunities to capture economies of scale while empowering the entrepreneur.

• Franchising: A franchise (or franchising) is a method of distributing products or services involving a franchisor, who establishes the brand's trademark or trade name and a business system, and a franchisee, who pays a royalty and often an initial fee for the right to do business under the franchisor's name and system.
• Mergers: A merger is the voluntary fusion of two companies on broadly equal terms into one new legal entity. The firms that agree to merge are roughly equal in terms of size, customers, and scale of operations. After a merger, shares of the new company are distributed to existing shareholders of both original businesses.
• Acquisitions: An acquisition is when one company purchases most or all of another company's shares to gain control of that company. Purchasing more than 50% of a target firm's stock and other assets allows the acquirer to make decisions about the newly acquired assets without the approval of the company's other shareholders.

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Internal expansion: Internal expansion results from the gradual increase in the activities of the enterprise.
For internal expansion, a firm may:

• Expand its present production capacity by adding more machines or by replacing old machines with the new machines with higher productive capacity.
• By taking up the production of more products or by entering new fields on the production and marketing sides.
• Internal expansion may be financed by the issue of more share capital, generating funds from old profits or by issuing long–term securities.

The operations manual is the documentation by which an organisation provides guidance for members and employees to perform their functions correctly and reasonably efficiently. It documents the approved standard procedures for performing operations safely to produce goods and provide services.

A business format franchise is a franchising arrangement where the franchisor provides the franchisee with an established business, including name and trademark, for the franchisee to run independently.
Prominent examples of well-known franchise business models include many food chain restaurants, such as McDonald's and Subway. Other examples of franchise opportunities are businesses like UPS and H & R Block. In the United States, there are franchise opportunities available across a wide variety of industries.

Franchising is an arrangement where franchisor (one party) grants or licenses some rights and authorities to franchisee (another party).
Franchisor authorizes franchisee to sell their products, goods, services and give rights to use their trademark and brand name. And these franchisee acts like a dealer.

Vertical Merger: A merger between two companies producing different goods or services for one specific finished product. A vertical merger occurs when two or more firms, operating at different levels within an industry's supply chain, merge-operations.

• Synergy is the concept that the combined value and performance of two companies will be greater than the sum of the separate individual parts.
• Synergy is a term that is most commonly used in the context of mergers and acquisitions (M&A).

• A conglomerate merger is "any merger that is not horizontal or vertical; in general, it is the combination of firms in different industries or firms operating in different geographic areas".
• One example of a conglomerate merger was the merger between the Walt Disney Company and the American Broadcasting Company.