Exam 7: Merger and Acquisition Strategies

Thomas is an upper-middle level manager for a firm that has been actively involved in acquisitions over the last 10 years. The firm has grown much larger as a result. Thomas has been dismayed to find that recently the managerial culture of the firm has been turning more and more to ____ controls.

United Technologies Corp. (UTC) uses acquisitions of firms such as Otis Elevator Company (elevators, escalators, and moving walkways) and Carrier Corporation (heating and air conditioning systems) as the foundation for implementing its related diversification strategy.

When the actual results of an acquisition strategy fall short of the projected results, firms consider using restructuring strategies.

A(n) ____ occurs when one firm buys a controlling, or 100 percent interest, in another firm.

What is an LBO and what have been the results of such activities?

Top manager participation in and overseeing the activities required for making acquisitions can divert managerial attention from other matters that are necessary for long-term competitive success.

Which of the following is NOT an attribute of a successful acquisition?

Wilberforce Press is a small book publishing firm in Iowa that has been owned by the same family since 1895. It is being purchased by Ozarka Publishing, another family-run business in Nebraska, which has been a specialty publisher for 77 years. Each company is known for its unique culture passed down from its founders. Executives and employees in both firms have "grown up" with their companies. Because both these companies have a long, stable history in highly related industries, this acquisition has a high probability of success.

Compared to internal product development, acquisitions allow:

____ typically result(s) in the acquiring firm being able to prevent valuable human resources in the acquired firm from leaving.

It is relatively common for a firm to develop new products internally to diversify its product lines.

When a firm acquires its supplier, it is engaging in a(n):

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

The use of high levels of debt in acquisitions has contributed to:

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

The post-acquisition integration phase is less important for acquisition success than characteristics of the deal itself.

How have changing conditions in the external environment influenced the type of M & A activity firms pursue?

What are the attributes of a successful acquisition program?

Most acquisitions that are designed to achieve greater market power entail buying a competitor, a supplier, a distributor, or a business in a highly related industry.

Restructuring refers to changes in the composition of a firm's set of businesses or its financial structure.