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

Which type of business strategy involves expanding into other locations and acquiring other offices?

1. Vertical Expansion

2. Horizontal Integration

3. Horizontal Expansion

4. Market Penetration

The correct answer is: Horizontal Expansion

The correct response identifies horizontal expansion as the strategy related to growing a business by entering additional locations and acquiring other offices. This approach enables a company to increase its market presence, improve its customer base, and enhance its competitive edge by establishing a wider geographical footprint. Horizontal expansion is characterized by the replication of the business model across different locations, potentially leading to economies of scale and increased brand recognition. This strategy is especially effective for businesses aiming to stabilize their operations and mitigate risks associated with market fluctuations. In contrast, vertical expansion typically refers to a company extending its operations either backward into its supply chain (upstream) or forward into distribution (downstream), rather than increasing its physical presence in various locations. Horizontal integration, on the other hand, involves merging or acquiring companies that operate at the same level of the supply chain, but it doesn’t specifically focus on geographic expansion. Market penetration is targeted at increasing a company's existing share in a current market, rather than branching into new locations. Thus, horizontal expansion is the best fit for the described scenario of expanding into additional locations and acquiring offices.