Which one of the following is not a factor that makes it appealing to diversify into a new industry by forming an internal start-up subsidiary to enter and compete in the target industry?

A. When internal entry is cheaper than entry via acquisition

B. When a company possesses the skills and resources to overcome entry barriers and there is ample time to launch the business and compete effectively

C. When adding new production capacity will not adversely impact the supply demand balance in the industry by creating oversupply conditions

D. When the industry is growing rapidly and the target industry is comprised of several relatively large and well-established firms

Question

Business

Patricia Lambert

19 August, 12:15

Which one of the following is not a factor that makes it appealing to diversify into a new industry by forming an internal start-up subsidiary to enter and compete in the target industry?

A. When internal entry is cheaper than entry via acquisition

B. When a company possesses the skills and resources to overcome entry barriers and there is ample time to launch the business and compete effectively

C. When adding new production capacity will not adversely impact the supply demand balance in the industry by creating oversupply conditions

D. When the industry is growing rapidly and the target industry is comprised of several relatively large and well-established firms

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Answers (1)

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Tobias Greene · Answer 1

C. When adding new production capacity will not adversely impact the supply demand balance in the industry by creating oversupply conditions

Explanation:

If the new production capacity will not improve the supply and demand balance then diversification would have an adverse effect on the growth of the internal start up subsidiary.