Question

What is the main difference between a company choosing to pursue an acquisition strategy versus an internal new venture strategy?

a. An internal new venture is chosen when the company already has the distinctive competency it needs to enter the new industry. In an acquisition, a company does not have the distinctive competency and chooses to purchase a company that does.
b. An acquisition is chosen when the company already has the distinctive competency it needs to enter the new industry, whereas in an internal new venture, a company does not have the distinctive competency and therefore purchases a company that does.
c. An internal new venture invests its funds in new resources. In an acquisition, the company is looking to decrease costs by purchasing the existing resources of another company.
d. A company is seeking to reduce costs through a new venture. In an acquisition, the company has unlimited funds to spend on the new business unit.

Answer 1

The main difference lies in the existing competencies: an internal new venture uses the company's current competencies to expand, while an acquisition strategy is used when the company lacks certain competencies and purchases another company that has them.

Step-by-step explanation:

The main difference between a company pursuing an acquisition strategy versus an internal new venture strategy is primarily based on whether the company already has the requisite competencies and resources to enter a new industry or market. Choice a correctly describes the distinction: in an internal new venture, a company utilizes its existing competencies to expand into a new industry, while in an acquisition, the company lacks some competencies and hence purchases another company that possesses them. Conversely, an acquisition strategy typically involves the company buying another firm with the needed competencies, resources, or market position, which can help the acquirer quickly establish a presence in the target industry, save time in developing such resources in-house, and potentially reduce costs by acquiring established operations.