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What is an advantage of putting resources towards internal development? Group of answer choices 1.Assume less...

What is an advantage of putting resources towards internal development?

Group of answer choices

1.Assume less debt.

2.Overcome entry barriers

3.Faster speed to market

4.None of the above

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Answer #1

Ans : C is correct option

Because when either economy or company is putting large resources towards internal development, the economy or  company size will increase and there is faster growth in their market share. There are two types of growth- organic growth or inorganic growth. When a company is putting resources in internal development, it is known as organic growth. On the other hand, if company is putting their resources or money in other company, it is known as inorganic growth or external development.So through internal development, there is an increase in market reach and faster speed to market.

Let us understand by an example:- If a company is selling their products in urban areas or in metropolitan cities only. If the company is putting their resources in rural areas it can increase their market reach and market share as well.

A is incorrect because it is unrelated to capital structure. But let us assume if it related to debt, in that case it will increase their debt because company is putting more resources that either will be funded by internal accruals(retained earnings) or taking more debt.

B is incorrect because entry barriers are those barrier which prevent the companies to enter into the market either due to huge cost (like in building dams for energy)or due to licensing( like arms and ammunition, liquor). Putting more resources does not ensures entry of firm

D is incorrect because there is one option which is corrrect

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