ACCA Strategic Professional · Strategic Business Leader · Strategic choices

Zentra Foods, a regional snack manufacturer, wants to enter a neighbouring country quickly. It lacks local distribution knowledge but does not want to lose control of its recipes or invest heavily. A local distributor offers to market Zentra's products under a contract in which the distributor owns its own business and shares no equity or management with Zentra. Which development method does this describe?

This is a strategic alliance of the contractual type. Zentra and the distributor remain independent, with no shared equity, and cooperate under an agreement. This gives local knowledge and speed with limited investment, unlike acquisition, merger or purely organic growth using Zentra's own resources.

AOrganic development through internal investment
BAcquisition of the distributor
CStrategic alliance through a contractual arrangement such as licensing or franchising-type agreementCorrect
DMerger of equals creating a new combined entity

Explanation

The arrangement is a contract between independent firms with no shared ownership, so it is a contractual alliance (like licensing or distribution agreements). Acquisition would involve buying the distributor's equity, and organic growth would rely on Zentra's own resources.

Did you get it right without looking?

One question tells you little. A timed set on Strategic choices shows your real accuracy, how long you take and where you lose marks.

Practise Strategic choices Free diagnostic mock

More Strategic choices questions