Question

‘Kapoor Merrytime Ltd.’ is a renowned name in naturally flavoured ice-creams made from fresh fruits and edible vegetables. The company has its presence in Maharashtra and Goa. Its ice-creams sell under the brand name 'Satvika'. The company has a strong foothold in Maharashtra but is struggling for success in the Goa market. The reason is the presence of a successful local brand by ‘Pastle Ice-creams Ltd.' in the market. ‘Pastle Ice-creams Ltd.’ is selling natural ice-creams with locally preferred flavours.

'Kapoor Merrytime Ltd.' tried to negotiate its way but because of the goodwill of 'Pastle Ice-creams Ltd, it could not succeed in its efforts. Frustrated, ‘Kapoor Merrytime Ltd.' started buying the shares of ‘Pastle Ice-creams Ltd.’ to gain control over the management of ‘Pastle Ice-creams Ltd.'

1. Identify and explain the type of business combination adopted by 'Kapoor Merrytime Ltd.' as its growth strategy in the Goa market.
2. Explain any two advantages which ‘Kapoor Merrytime Ltd.' would have by adopting its designed strategy. 

Answer 1

1. The kind of business combination that 'Kapoor Merrytime Ltd.' has chosen is an acquisition. When one business buys the majority or all of another business's shares in order to take over that business, this is known as an acquisition. In this case, Kapoor Merrytime Ltd. is acquiring Paste Ice-creams Ltd. shares in order to take command of its management, enabling it to increase its market share and outperform rivals in Goa.
2. Two advantages which ‘Kapoor Merrytime Ltd.' would have by adopting its designed strategy are:
   1. Increased Market Share: Kapoor Merrytime Ltd. can greatly expand its market share in Goa by purchasing Paste Ice Creams Ltd. By taking advantage of Pastle's local fame and customers, this lessens competition and strengthens market presence.
   2. Access to Established Distribution Networks and Customer Loyalty: Kapoor Merrytime Ltd. acquires a devoted client base and an established distribution network by acquiring Pastle Ice Creams Lid. This can result in more rapid sales and revenue growth in the new market and save the time and money required to build these from start.