Texas Real Estate Brokerage Sales Apprentice Education (SAE) Practice Exam

Which term is used when a company purchases another company to expand its operations?

1. Acquisition

2. Market Penetration

3. Monopoly

4. Horizontal Integration

The correct answer is: Acquisition

The term that describes a company purchasing another company to expand its operations is "Acquisition." This term specifically refers to the process wherein one company takes over another company, which can involve buying the majority or all of the target company's stock or assets. Acquisitions are often part of a broader corporate strategy for growth, allowing the acquiring company to enhance its market share, increase its operational capabilities, or diversify its offerings. The other terms have distinct meanings that do not align with the concept of purchasing another company. Market Penetration refers to a strategy used by companies to sell existing products in their current markets to increase their market share. Monopoly signifies a market structure where a single company or entity holds significant control over a market, often to the detriment of competition. Horizontal Integration describes a strategy where a company acquires or merges with a competitor in the same industry to consolidate its position, but it is a more specific form of acquisition focused on competitors rather than any target company.