When a business merges with or takes over another business, this is an example of which growth approach?

• A. Mergers
• B. Takeover / Acquisition
• C. External Growth
• D. Diversification

Answer: (C)

Growth through merging with or taking over another business is external growth, because the company expands by joining with an outside firm rather than by increasing its own operations. This approach uses another company’s resources, customers, and capabilities to grow quickly. Internal (organic) growth would come from expanding existing operations—selling more, improving productivity, or investing in capacity without merging with another business. Diversification means entering new products or markets, which isn’t specifically about merging with another firm. So the scenario best describes external growth.