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Question
The merger of Techno Fit and Let’s Konnect was due to the rising competition with Arihant Tech. The market was slowly captured by Arihant Tech, due to its policy of providing free service in the first 6 months. Both Techno Fit and Let’s Konnect couldn't stand the price war between the companies in the telecom sector and decided to come together so as to increase their market share. This strategy helped them in cost saving through economies of scale as they could cover more areas now. It led to the overall growth of both companies.
Identify and explain the growth strategy adopted above by the telecom operators, Techno Fit and Let’s Konnect.
Solution
The telecom operators adopted a market extension merger strategy.
Market extension merger strategy: is a type of merger that takes place between two companies that deal in the same products but in separate markets. The main purpose of this type of merger is to make sure that the merging companies can get access to a bigger market and that ensures a bigger client base.
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