Size of business

Question 1

External growth

Answer 1

business expansion achieved by means of merging with or taking over another business, from either the same or a different industry.

Question 2

Merger

Answer 2

an agreement by shareholders and managers of two businesses to bring both firms together under a common board of directors with shareholders in both businesses owning shares in the newly merged business.

Question 3

Takeover

Answer 3

when a company buys more than 50%of the shares of another company and becomes the controlling owner of it – often referred to as ‘acquisition’.

Question 4

Synergy

Answer 4

literally means that ‘the whole is greater than the sum of parts’, so in integration it is often assumed that the new, larger business will be more successful than the two, formerly separate, businesses were.

Question 5

Strategic alliances

Answer 5

are agreements between firms in which each agrees to commit resources to achieve an agreed set of objectives.