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ACCA Strategic Professional · Advanced Financial Management · Acquisitions and mergers versus other growth strategies

Zenara plc wants to enter a new overseas market quickly and has identified a local competitor that already has an established distribution network. Which of the following is the main advantage of growing by acquiring that competitor rather than through organic growth?

The main advantage of acquisition over organic growth is speed: the acquirer gains immediate market entry, customers and an established distribution network, whereas building these internally would take years. Acquisitions still carry risks such as overpayment and integration problems.

  1. ASpeed of market entry and immediate access to existing customers and distributionCorrect
  2. BLower risk of overpaying because the price is set by internal costs
  3. CAvoidance of any integration or cultural issues
  4. DRetention of full control over the pace of investment spending

Explanation

Acquisition gives immediate market presence, customer base and distribution, which organic growth would take years to build. Option B is wrong because acquisitions carry a risk of overpayment, and C is wrong because integration problems are a typical disadvantage of acquisitions.

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