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A business is planning to increase its market share by merging with a competitor - HSC - SSCE Business Studies - Question 2 - 2014 - Paper 1
Question 2
A business is planning to increase its market share by merging with a competitor. What financial objective does this best illustrate? (A) Growth (B) Liquidity (C) P... show full transcript
Worked Solution & Example Answer:A business is planning to increase its market share by merging with a competitor - HSC - SSCE Business Studies - Question 2 - 2014 - Paper 1
Step 1
What financial objective does this best illustrate?
Answer
The statement indicates that a business is planning to increase its market share. This objective is primarily associated with enhancing the overall size and influence of the business in the market.
Among the options provided:
- A) Growth: This option aligns directly with the intention of merging to capture a larger market segment, leading to increased sales and revenue.
- B) Liquidity: This focuses on the availability of cash to meet short-term obligations, which is not the primary intent of the merger.
- C) Profitability: While a merger may eventually lead to higher profits, the immediate goal signified here is not about profit but market presence.
- D) Solvency: This relates to the company’s ability to meet long-term debts, which again, is not the direct aim of the merger.
Thus, the most fitting choice reflecting the financial objective illustrated by the business's plan to merge is A) Growth.