Test: Enterprise Growth Strategies - 2 - CUET Commerce MCQ

Every business needs to focus on attracting new customers. If you've already exhausted available sales opportunities in your current market, thinking outside the box and turning to untapped markets can help you scale up and stay on your current growth trajectory. Therefore, the rule of thumb is that one should only expand when there are untapped opportunities that can benefit the business.
So, option 2 is correct.

A merger occurs when two separate entities combine forces to create a new, joint organisation. Meanwhile, an acquisition refers to the takeover of one entity by another. Mergers and acquisitions may be completed to expand a company's reach or gain market share in an attempt to create shareholder value. It is external expansion. So, option 3 is correct.

A franchisee is a person who purchases the franchise and is given the opportunity to enter a new business with a better chance to success. In doing so, the franchisee has purchased the right to use an existing business's trademarks, associated brands, and other proprietary knowledge to market and sell the same brand, and uphold the same standards as the first business.
So, option 1 is correct.

Mainly, there are 4 ingredients in a franchise agreement. These are Contract Explanation, Operations Manual, Proprietary Statements, and Ongoing Site Maintenance. Hence, option 4 is correct.

Usually, mergers occur in a consensual setting, where executives from the target company help those from the purchasers in a due diligence process to ensure that the deal is beneficial to both the parties. In a merger, the boards of directors of the two firms agree to combine and seek stockholders' approval for the combination.
The terms mergers and acquisitions are often used interchangeably, but they differ in meaning. In an acquisition, one company purchases another outright. A merger is the combination of two firms, which subsequently form a new legal entity under the banner of one corporate name. A company can be objectively valued by studying comparable companies in an industry and using metrics.
So, option 4 justifies the given statement.

Merger is defined as combination of two or more companies into a single company where one survives and the others lose their corporate existence. The survivor acquires all the assets as well as liabilities of the merged company or companies. Generally, the surviving company is the buyer, which retains its identity, and the extinguished company is the seller.

In business-format franchising, there is a more interactive relationship between the franchisor and the franchisee than with product/trademark franchising. In business-format franchises (which are the most common type), a company expands by supplying independent business owners with an established business, including its name and trademark.
Hence, option 4 is correct.

Global Strategy is the planned method of delivering goods or service to a new target market and distributing them there. The following strategies are the main entry options open to a firm: direct exporting, licensing, franchising, merger and acquisition, exporting and turnkey projects.

A vertical merger is a type of merger in which a merger takes place between two companies where one company provides parts and services for the production of the products of another company. The motivation behind such mergers is cost efficiency, operational efficiency, increased margins and more control over the production or the distribution process.

Conglomerate is a type of merger when two companies which are in entirely different businesses merge. It is further classified as:
(i) Pure conglomerate: In this, the two firms have nothing in common.
(ii) Mixed conglomerate: In this, the two firms look for products or market extension.