An Italian car manufacturer purchases a U.S. producer of car tires. This is an example of:

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BlackTom AI · Accepted Answer

Consider what the scenario describes: an Italian car manufacturer buys a United States tire producer. 
Option a: A merger. A merger typically implies two or more companies combine to form a new, joint entity rather than one company purchasing another. Since the definition here is a purchase by one firm of another, this is not a classic merger. 
Option b: An acquisition. This matches the situation precisely: one company (the Italian car maker) acquires another (the U.S. tire producer), gaining control over it. 
Option c: An absolute advantage. This is an economic concept used to describe a country’s or entity’s ability to produce a good more efficiently than others, not an organizational transaction between firms. The scenario isn’t about production efficiency comparisons, so this doesn’t fit. 
Option d: A greenfield investment. Greenfield investment refers to establishing a new operation from scratch, such as building a new factory abroad, rather than purchasing an existing company. The described action is a purchase of an existing producer, not starting anew. 
Overall, the only option that accurately characterizes a purchase of one company by another is option b, an acquisition.

MGF2351 - S2 2025 Week 10 Quiz

An Italian car manufacturer purchases a U.S. producer of car tires. This is an example of:

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