Cyclane's chief marketing officer suggests that a merger with an existing company provides unique opportunities that are not afforded by exporting products or by constructing new facilities. Which of the following, if true, strengthens his position?
A) A merger with an existing company allows a company to learn from locals about the local market.
B) A merger with an existing company often provides a high return on investment over the long term.
C) A merger with an existing company expands a company's market beyond the domestic one.
D) A merger with an existing company typically involves several legal hurdles.
E) A merger with an existing company can greatly complicate business operations.
Answer: A
Explanation: A) The opportunity to learn from locals about a local market is a unique opportunity provided by a merger with an existing company, and not one not afforded by exporting products or building new facilities. Choice B does not describe an opportunity unique to a merger, since other forms of FDI also allow a high return on investment over the long term. Choice C does not describe an opportunity unique to a merger, since exporting one's products internationally also expands a company's market. Choices D and E are possible drawbacks to a merger and thus weaken the case for undertaking one.
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