What term describes the external growth strategy where one business buys a controlling interest in another, often against the wishes of the target's directors?

What term describes the external growth strategy where one business buys a controlling interest in another, often against the wishes of the target's directors?

• A. Franchising
• B. Merger
• C. Takeover
• D. Joint Venture

Answer: (C)

Takeover describes an external growth move where one business gains control of another by buying a controlling stake, often against the wishes of the target’s directors. This means the acquiring firm can set strategy and make decisions even if the other company doesn’t want to be taken over. It’s the hallmark of a hostile or uncooperative acquisition, distinguished from other forms of growth. Franchising is about licensing a brand and business model to others to operate under the same system, not about gaining ownership of another company. A merger is a voluntary alliance where two firms combine into one, usually with mutual consent and integration of operations. A joint venture is a new, separate entity formed by two or more organizations to pursue a specific purpose, with shared ownership and risk.

Takeover describes an external growth move where one business gains control of another by buying a controlling stake, often against the wishes of the target’s directors. This means the acquiring firm can set strategy and make decisions even if the other company doesn’t want to be taken over. It’s the hallmark of a hostile or uncooperative acquisition, distinguished from other forms of growth.

Franchising is about licensing a brand and business model to others to operate under the same system, not about gaining ownership of another company. A merger is a voluntary alliance where two firms combine into one, usually with mutual consent and integration of operations. A joint venture is a new, separate entity formed by two or more organizations to pursue a specific purpose, with shared ownership and risk.