Definition

Acquisitions of existing operations

Firms frequently acquire other firms in foreign countries as a means of penetrating foreign markets. For example, American Express recently acquired offices in London, while Procter & Gamble purchased a bleach company in Panama. An acquisition occurs when one company buys another. Acquisitions allow firms to have full control over their foreign business and to quickly obtain a large portion of foreign market share. An acquisitions of an existing corporation is subject to the risk of large losses, however, because of the large investment. In addition, if the foreign operation perform poorly, it may be difficult to sell the operations at a reasonable price.

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