Test: Enterprise Growth Strategies - 1 - CUET Commerce MCQ

Internal expansion and external expansion are the two ways in which an organisation can expand. So, option 2 is the correct answer.

The company is planning internal expansion. Internal expansion is the process of growing a business through the use of resources within the business, and not involving the use of any type of outside activities to solicit new customers.
By increasing the number of livestock, the company is increasing resources within its business. So, option 1 is correct.

Franchising began in 1850s when Isaac Singer, the inventor of sewing machine, wanted to distribute his machines outside of his geographical area and provide training to customers. Singer began selling licences to entrepreneurs in different parts of the country. So, option 2 is correct.

Product diversification is the practice of expanding the original market for a product. This strategy is used to increase the sales associated with an existing product line, which is especially useful for a business that has been experiencing stagnant or declining sales. Hence, option 3 is correct.

Franchise organisation is an example of contractual vertical marketing system. Franchise organisations are committed to bringing fair and balanced franchise relationship in the overall franchising community.

Horizontal merger is a business consolidation that occurs between firms which operate in the same space, often as competitors offering the same goods or service. Horizontal mergers are common in industries with fewer firms, as competition tends to be higher and the synergies and potential gains in market share are much greater for merging firms in such an industry.
So, option 1 is correct.

A horizontal merger is a merger or business consolidation that occurs between firms that operate in the same industry. Composition tends to be higher among companies operating in the same space, meaning synergies and potential gains in market share are much greater for merging firms.
Here, Rajat Builders and Ashok Constructors were involved in flats business. So, option 1 is correct.

An acquisition is a situation whereby one company purchases most or all of another company's shares in order to take control. An acquisition occurs when a buying company obtains more than 50% ownership in a target company. As part of the exchange, the acquiring company often purchases the target company's stock and other assets, which allows the acquiring company to make decisions regarding the newly acquired assets without the approval of the target company's shareholders. It implies that the acquiring company permanently acquires the title over the shares of the other company.

Consolidation means a combination of two or more entities that occurs when the entities transfer all their net assets to a new entity created for that purpose. It is the merger and acquisition of many smaller companies into much larger ones.
Diversification is the process of a company enlarging or varying its range of products.
When one company takes over another, including all assets and liabilities, it is called merger.

Michael Porter discussed this in his influential 1985 book "Competitive Advantage," in which he first introduced the concept of the value chain.
A value chain is a set of activities that an organisation carries out to create value for its customers. Porter proposed a general-purpose value chain that companies can use to examine all of their activities, and see how they're connected. The way in which value chain activities are performed determines costs and affects profits. So, this tool can help you understand the sources of value for your organisation.