Question

Which of the following reason(s) for acquisitions can be explained by increased market power?

Select one:
a. Acquisition for overcoming entry barrier
b. Acquisition for learning and developing new capabilities
c. Acquisition of a competitor in the same industry
d. Acquisition to lower risk compared to developing new products
e. All of the above

Answer 1

The reason for an acquisition explained by increased market power is the acquisition of a competitor in the same industry (c), which aims to increase market share and reduce competition.

Step-by-step explanation:

In the context of reasons for acquisitions that can be explained by increased market power, the correct answer is c. Acquisition of a competitor in the same industry. When a company acquires a competitor, it directly increases its market power by reducing competition and potentially gaining a larger market share.

While the other options a. Acquisition for overcoming entry barriers, b. Acquisition for learning and developing new capabilities, and d. Acquisition to lower risk compared to developing new products are valid reasons for an acquisition, they are not primarily about directly increasing market power.

Options a. and d. are more related to strategic growth and risk management, whereas b. is about gaining new skills or technology, which could indirectly lead to increased market power but is not the primary reason in the context of the question.