Question 1

A merger is defined as a strategy in which one firm purchases controlling interest in another firm.

Accepted Answer

A) True 
 B)False  False

Question 2

Which of the following is NOT a result of overdiversification?

Accepted Answer

A)  Executives do not have a rich understanding of all of the firm's business units. 
B)  Managers emphasize strategic controls rather than financial controls. 
C)  Firms use acquisition as a substitute for innovation. 
D)  Managers become short-term in their orientation. 
A)  Executives do not have a rich understanding of all of the firm's business units. 
B)  Managers emphasize strategic controls rather than financial controls. 
C)  Firms use acquisition as a substitute for innovation. 
D)  Managers become short-term in their orientation. B

Question 3

Failing to __________ appropriately will result in too many employees doing the same work and prevent the new firm from realizing the cost synergies it anticipated.

Accepted Answer

A)  downsize 
B)  spin off 
C)  downscope 
D)  buy out 
A)  downsize 
B)  spin off 
C)  downscope 
D)  buy out A

Question 4

Acquisitions can become a substitute for innovation in some firms and can leave a firm vulnerable.

Accepted Answer

A) True 
 B)False

Question 5

Firms can increase their speed to market for new products by pursuing an internal product development strategy rather than an acquisition strategy.

Accepted Answer

A) True 
 B)False

Question 6

An acquisition occurs when one firm buys a controlling, or 100 percent, interest in another firm and the acquired firm becomes a subsidiary business within its portfolio.

Accepted Answer

A) True 
 B)False

Question 7

The fastest and easiest way for a firm to diversity its portfolio of businesses is through acquisition because:

Accepted Answer

A)  of barriers to entry in many industries. 
B)  it is difficult and time intensive for companies to develop products that differ from their current product line. 
C)  innovation in both the acquired and the acquiring firm is enhanced by the exchange of competencies resulting from acquisition. 
D)  unrelated acquisitions are usually uncomplicated since the acquired firm is allowed to continue to function independently as it did before acquisition. 
A)  of barriers to entry in many industries. 
B)  it is difficult and time intensive for companies to develop products that differ from their current product line. 
C)  innovation in both the acquired and the acquiring firm is enhanced by the exchange of competencies resulting from acquisition. 
D)  unrelated acquisitions are usually uncomplicated since the acquired firm is allowed to continue to function independently as it did before acquisition.

Question 8

Manny Inc.recently completed the purchase of its primary supplier.Manny intends to begin expanding the market to which the supplier's products are sold.This purchase is a(n):

Accepted Answer

A)  merger. 
B)  unrelated acquisition. 
C)  horizontal acquisition. 
D)  vertical acquisition. 
A)  merger. 
B)  unrelated acquisition. 
C)  horizontal acquisition. 
D)  vertical acquisition.

Question 9

Claude holds a large number of shares of Bayou Beauty, a regional brewing company that is considered a likely takeover target by a major international brewer.It would probably be in Claude's financial interest if Bayou Beauty's owners:

Accepted Answer

A)  resisted selling at any price. 
B)  sold the company to the larger brewer. 
C)  designed a poison pill to discourage a takeover. 
D)  looked for smaller brewers to acquire instead of selling to the larger brewer. 
A)  resisted selling at any price. 
B)  sold the company to the larger brewer. 
C)  designed a poison pill to discourage a takeover. 
D)  looked for smaller brewers to acquire instead of selling to the larger brewer.

Question 10

An advantage of using horizontal, vertical, or related acquisitions is that they are not subject to regulatory review.

Accepted Answer

A) True 
 B)False

Question 11

Among the challenges associated with integration processes is the need to link different financial and control systems.

Accepted Answer

A) True 
 B)False

Question 12

Restructuring is a strategy through which a firm changes its set of businesses or its financial structure.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is NOT a characteristic of a successful acquisition?

Accepted Answer

A)  The acquiring firm has a large amount of financial slack. 
B)  The acquired and acquiring firms have complementary assets and/or resources. 
C)  Innovation and R&D investments continue as part of the firm's strategy. 
D)  Investments in advertising and image building are made quickly. 
A)  The acquiring firm has a large amount of financial slack. 
B)  The acquired and acquiring firms have complementary assets and/or resources. 
C)  Innovation and R&D investments continue as part of the firm's strategy. 
D)  Investments in advertising and image building are made quickly.

Question 14

Synergy is created by the efficiencies derived from economies of scale and economies of scope and by sharing resources across the businesses in the newly created firm's portfolio.

Accepted Answer

A) True 
 B)False

Question 15

Pappelbon Enterprises recently acquired a chain of convenience stores offering both fuel and food.Pappelbon is now surprised and dismayed to find that the gas pumps have been poorly maintained and will need to be replaced at considerable expense.All of the following statements accurately reflect this EXCEPT:

Accepted Answer

A)  Pappelbon did not fully evaluate the target. 
B)  Pappelbon overpaid. 
C)  Pappelbon's due diligence was not fully effective. 
D)  Pappelbon's management was overly focused on acquisitions. 
A)  Pappelbon did not fully evaluate the target. 
B)  Pappelbon overpaid. 
C)  Pappelbon's due diligence was not fully effective. 
D)  Pappelbon's management was overly focused on acquisitions.

Question 16

Large or extraordinary debt is defined as overpaying for an acquired firm.

Accepted Answer

A) True 
 B)False

Question 17

Restructuring strategies are commonly used to correct or deal with the results of ineffective mergers and acquisitions.

Accepted Answer

A) True 
 B)False

Question 18

Sales of watches among teenagers and twenty-somethings are declining rapidly as this age group uses cellphones, iPods, and other devices to tell time.A company that specializes in selling inexpensive watches to this age group may wish to consider __________ in order to develop new products other than watches.

Accepted Answer

A)  unrelated diversification 
B)  backward integration 
C)  forward integration 
D)  horizontal acquisition 
A)  unrelated diversification 
B)  backward integration 
C)  forward integration 
D)  horizontal acquisition

Question 19

In the current global landscape, firms from North America and Europe use the acquisition strategy more frequently than firms from other nations.

Accepted Answer

A) True 
 B)False

Question 20

When the target firm does not solicit the acquiring firm's bid, it is referred to as a(n):

Accepted Answer

A)  stealth raid. 
B)  adversarial acquisition. 
C)  takeover or unfriendly acquisition. 
D)  leveraged buyout. 
A)  stealth raid. 
B)  adversarial acquisition. 
C)  takeover or unfriendly acquisition. 
D)  leveraged buyout.

A merger is defined as a strategy in which one firm purchases controlling interest in another firm.

Which of the following is NOT a result of overdiversification?

Failing to __________ appropriately will result in too many employees doing the same work and prevent the new firm from realizing the cost synergies it anticipated.

Acquisitions can become a substitute for innovation in some firms and can leave a firm vulnerable.

Firms can increase their speed to market for new products by pursuing an internal product development strategy rather than an acquisition strategy.

An acquisition occurs when one firm buys a controlling, or 100 percent, interest in another firm and the acquired firm becomes a subsidiary business within its portfolio.

The fastest and easiest way for a firm to diversity its portfolio of businesses is through acquisition because:

Manny Inc.recently completed the purchase of its primary supplier.Manny intends to begin expanding the market to which the supplier's products are sold.This purchase is a(n):

Claude holds a large number of shares of Bayou Beauty, a regional brewing company that is considered a likely takeover target by a major international brewer.It would probably be in Claude's financial interest if Bayou Beauty's owners:

An advantage of using horizontal, vertical, or related acquisitions is that they are not subject to regulatory review.

Among the challenges associated with integration processes is the need to link different financial and control systems.

Restructuring is a strategy through which a firm changes its set of businesses or its financial structure.

Which of the following is NOT a characteristic of a successful acquisition?

Synergy is created by the efficiencies derived from economies of scale and economies of scope and by sharing resources across the businesses in the newly created firm's portfolio.

Large or extraordinary debt is defined as overpaying for an acquired firm.

Restructuring strategies are commonly used to correct or deal with the results of ineffective mergers and acquisitions.

In the current global landscape, firms from North America and Europe use the acquisition strategy more frequently than firms from other nations.

When the target firm does not solicit the acquiring firm's bid, it is referred to as a(n):

Strategic Management and Strategic Competitiveness

The External Environment: Opportunities, Threats, Industry Competition, and Competitor Analysis

The Internal Organization: Resources, Capabilities, Core Competencies, and Competitive Advantages

Business-Level Strategy

Competitive Rivalry and Competitive Dynamics

Corporate-Level Strategy

International Strategy

Cooperative Strategy

Corporate Governance

Organizational Structure and Controls

Strategic Leadership

Strategic Entrepreneurship

Filters

Exam 7: Merger and Acquisition Strategies

A merger is defined as a strategy in which one firm purchases controlling interest in another firm.

Which of the following is NOT a result of overdiversification?

Failing to __________ appropriately will result in too many employees doing the same work and prevent the new firm from realizing the cost synergies it anticipated.

Acquisitions can become a substitute for innovation in some firms and can leave a firm vulnerable.

Firms can increase their speed to market for new products by pursuing an internal product development strategy rather than an acquisition strategy.

An acquisition occurs when one firm buys a controlling, or 100 percent, interest in another firm and the acquired firm becomes a subsidiary business within its portfolio.

The fastest and easiest way for a firm to diversity its portfolio of businesses is through acquisition because:

Manny Inc.recently completed the purchase of its primary supplier.Manny intends to begin expanding the market to which the supplier's products are sold.This purchase is a(n):

Claude holds a large number of shares of Bayou Beauty, a regional brewing company that is considered a likely takeover target by a major international brewer.It would probably be in Claude's financial interest if Bayou Beauty's owners:

An advantage of using horizontal, vertical, or related acquisitions is that they are not subject to regulatory review.

Among the challenges associated with integration processes is the need to link different financial and control systems.

Restructuring is a strategy through which a firm changes its set of businesses or its financial structure.

Which of the following is NOT a characteristic of a successful acquisition?

Synergy is created by the efficiencies derived from economies of scale and economies of scope and by sharing resources across the businesses in the newly created firm's portfolio.

Large or extraordinary debt is defined as overpaying for an acquired firm.

Restructuring strategies are commonly used to correct or deal with the results of ineffective mergers and acquisitions.

In the current global landscape, firms from North America and Europe use the acquisition strategy more frequently than firms from other nations.

When the target firm does not solicit the acquiring firm's bid, it is referred to as a(n):

Strategic Management and Strategic Competitiveness

The External Environment: Opportunities, Threats, Industry Competition, and Competitor Analysis

The Internal Organization: Resources, Capabilities, Core Competencies, and Competitive Advantages

Business-Level Strategy

Competitive Rivalry and Competitive Dynamics

Corporate-Level Strategy

International Strategy

Cooperative Strategy

Corporate Governance

Organizational Structure and Controls

Strategic Leadership

Strategic Entrepreneurship

Filters