What strategy uses methods like acquisitions or mergers to expand a business?

The correct answer is based on the concept of External Growth, which refers to the expansion of a business by collaborating with or acquiring other companies. This strategy typically involves methods such as mergers, acquisitions, partnerships, or alliances, enabling a business to increase its market share, diversify its product offerings, or enter new markets more effectively than it could through organic means.

External Growth allows a company to leverage the resources and strengths of another organization to enhance its own competitive advantage. For instance, acquiring a competitor can lead to increased market presence and can significantly boost revenue by consolidating customer bases. Similarly, merging with another business can provide opportunities for operational synergies and innovation by combining different skill sets and technologies.

In contrast, the other strategies mentioned do not primarily focus on acquisition or merging with other firms. Internal Growth involves expanding a business using its own resources and capabilities, such as increasing production capacity or improving marketing efforts. Franchising is a method of growth through licensing the rights to operate a business under a brand name, allowing for geographic expansion without direct ownership. Product Development centers on creating new products or improving existing ones to sell to current customers, rather than growing through external partnerships or acquisitions.