A manager in your company is proposing the acquisition of Taylor Company, which

Question

A manager in your company is proposing the acquisition of Taylor Company, which has developed a new, innovative product instead of a strategy of developing new products in-house. All of the following arguments are correct EXCEPT: a. the outcomes of acquisitions can be estimated more easily and accurately than the outcomes for an internal product development process. b. acquisitions could become a substitute for innovation within your firm. c. the acquisition of Taylor should be primarily for defensive rather than strategic reasons. d. research suggests that acquisition strategies are a common means of avoiding risky internal ventures.

Explanation / Answer

c. the acquisition of Taylor should be primarily for defensive rather than strategic reasons.

Strategic reasons often lead to successful acquisitions of the Companies, especially when developing new products in-house become a costly and time-consuming affair. Hence this argument is rather wrong that acquisitions need to be primarily defensive in nature.

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