Question 1

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 2

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 3

Currently, the rationale for making an acquisition includes each of the following EXCEPT:

Accepted Answer

A)  to increase market power. 
B)  to decrease taxes paid by shareholders. 
C)  to overcome entry barriers. 
D)  to increase diversification. 
A)  to increase market power. 
B)  to decrease taxes paid by shareholders. 
C)  to overcome entry barriers. 
D)  to increase diversification.

Question 4

Describe the seven problems in achieving a successful acquisition.

Accepted Answer

Acquisition strategies present many pote

Question 5

Horizontal acquisitions and related acquisitions tend to contribute less to a firm's competitiveness than do unrelated acquisitions.

Accepted Answer

A) True 
 B)False

Question 6

After a leveraged buyout, ____ typically occur(s).

Accepted Answer

A)  selling of assets 
B)  further rounds of acquisitions 
C)  due diligence 
D)  private synergy 
A)  selling of assets 
B)  further rounds of acquisitions 
C)  due diligence 
D)  private synergy

Question 7

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

Question 8

The ____ phase is probably the single most important determinant of shareholder value creation in mergers and acquisitions.

Accepted Answer

A)  pre-acquisition negotiations 
B)  pre-acquisition due diligence 
C)  post-acquisition integration 
D)  post-acquisition restructuring 
A)  pre-acquisition negotiations 
B)  pre-acquisition due diligence 
C)  post-acquisition integration 
D)  post-acquisition restructuring

Question 9

Private synergies are unique to the acquired and acquiring firms and could not be developed by combining either firm's assets with another company.

Accepted Answer

A) True 
 B)False

Question 10

A manager in your company is proposing the acquisition of Taylor Company, which has developed a new, innovative product instead of a strategy of developing new products in-house. All of the following arguments are correct EXCEPT:

Accepted Answer

A)  the acquisition of Taylor should be primarily for defensive rather than strategic reasons. 
B)  research suggests that acquisition strategies are a common means of avoiding risky internal ventures. 
C)  the outcomes of acquisitions can be estimated more easily and accurately than the outcomes for an internal product development process. 
D)  acquisitions could become a substitute for innovation within your firm. 
A)  the acquisition of Taylor should be primarily for defensive rather than strategic reasons. 
B)  research suggests that acquisition strategies are a common means of avoiding risky internal ventures. 
C)  the outcomes of acquisitions can be estimated more easily and accurately than the outcomes for an internal product development process. 
D)  acquisitions could become a substitute for innovation within your firm.

Question 11

Without effective due diligence the:

Accepted Answer

A)  acquiring firm is likely to overpay for an acquisition. 
B)  firm may miss its opportunity to buy a well-matched company. 
C)  acquisition may deteriorate into a hostile takeover, reducing the value creating potential of the action. 
D)  firm may be unable to act quickly and decisively in purchasing the target firm. 
A)  acquiring firm is likely to overpay for an acquisition. 
B)  firm may miss its opportunity to buy a well-matched company. 
C)  acquisition may deteriorate into a hostile takeover, reducing the value creating potential of the action. 
D)  firm may be unable to act quickly and decisively in purchasing the target firm.

Question 12

Research has shown that the more different the acquired firm is in terms of competencies and resources than the acquiring firm, the more likely the acquisition is to be successful.

Accepted Answer

A) True 
 B)False

Question 13

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 because 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 because the acquired firm is allowed to continue to function independently as it did before acquisition.

Question 14

All of the following statements are correct EXCEPT:

Accepted Answer

A)  immediately after the announcement of a planned acquisition, the stock price of the majority of acquiring firms declines. 
B)  shareholders of acquired firms often earn above-average returns from an acquisition. 
C)  the majority of acquisitions increase long-term value for the acquiring firm. 
D)  shareholders of acquiring firms typically earn returns from the transaction that are close to zero. 
A)  immediately after the announcement of a planned acquisition, the stock price of the majority of acquiring firms declines. 
B)  shareholders of acquired firms often earn above-average returns from an acquisition. 
C)  the majority of acquisitions increase long-term value for the acquiring firm. 
D)  shareholders of acquiring firms typically earn returns from the transaction that are close to zero.

Question 15

During the recent financial crisis, M&A activity ______, whereas in 2011, M&A activity ______.

Accepted Answer

A)  declined; increased 
B)  declined; declined 
C)  increased; increased 
D)  increased; declined 
A)  declined; increased 
B)  declined; declined 
C)  increased; increased 
D)  increased; declined

Question 16

Describe how an acquisition program can result in managerial time and energy absorption.

Accepted Answer

Typically, a substantial amount of manag

Question 17

The acquisition of Sun Microsystems (a computer hardware producer) by Oracle Corporation (a software firm) is an example of a(n):

Accepted Answer

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

Question 18

Private synergy:

Accepted Answer

A)  occurs in most related acquisitions and allows firms to see increased returns. 
B)  is frequently achieved in conglomerates. 
C)  is not easy for competitors to understand and imitate. 
D)  is assessed by managers during the due diligence process. 
A)  occurs in most related acquisitions and allows firms to see increased returns. 
B)  is frequently achieved in conglomerates. 
C)  is not easy for competitors to understand and imitate. 
D)  is assessed by managers during the due diligence process.

Question 19

Downsizing may be necessary because acquisitions often create a situation in which the newly formed firm has duplicate organizational functions such as sales, manufacturing, distribution, human resources, and management.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

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

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

Currently, the rationale for making an acquisition includes each of the following EXCEPT:

Describe the seven problems in achieving a successful acquisition.

Horizontal acquisitions and related acquisitions tend to contribute less to a firm's competitiveness than do unrelated acquisitions.

After a leveraged buyout, ____ typically occur(s).

The ____ phase is probably the single most important determinant of shareholder value creation in mergers and acquisitions.

Private synergies are unique to the acquired and acquiring firms and could not be developed by combining either firm's assets with another company.

A manager in your company is proposing the acquisition of Taylor Company, which has developed a new, innovative product instead of a strategy of developing new products in-house. All of the following arguments are correct EXCEPT:

Without effective due diligence the:

Research has shown that the more different the acquired firm is in terms of competencies and resources than the acquiring firm, the more likely the acquisition is to be successful.

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

All of the following statements are correct EXCEPT:

During the recent financial crisis, M&A activity , whereas in 2011, M&A activity .

Describe how an acquisition program can result in managerial time and energy absorption.

The acquisition of Sun Microsystems (a computer hardware producer) by Oracle Corporation (a software firm) is an example of a(n):

Private synergy:

Downsizing may be necessary because acquisitions often create a situation in which the newly formed firm has duplicate organizational functions such as sales, manufacturing, distribution, human resources, and management.

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

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

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

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

Currently, the rationale for making an acquisition includes each of the following EXCEPT:

Describe the seven problems in achieving a successful acquisition.

Horizontal acquisitions and related acquisitions tend to contribute less to a firm's competitiveness than do unrelated acquisitions.

After a leveraged buyout, ____ typically occur(s).

The ____ phase is probably the single most important determinant of shareholder value creation in mergers and acquisitions.

Private synergies are unique to the acquired and acquiring firms and could not be developed by combining either firm's assets with another company.

A manager in your company is proposing the acquisition of Taylor Company, which has developed a new, innovative product instead of a strategy of developing new products in-house. All of the following arguments are correct EXCEPT:

Without effective due diligence the:

Research has shown that the more different the acquired firm is in terms of competencies and resources than the acquiring firm, the more likely the acquisition is to be successful.

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

All of the following statements are correct EXCEPT:

During the recent financial crisis, M&A activity ______, whereas in 2011, M&A activity ______.

Describe how an acquisition program can result in managerial time and energy absorption.

The acquisition of Sun Microsystems (a computer hardware producer) by Oracle Corporation (a software firm) is an example of a(n):

Private synergy:

Downsizing may be necessary because acquisitions often create a situation in which the newly formed firm has duplicate organizational functions such as sales, manufacturing, distribution, human resources, and management.

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

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

During the recent financial crisis, M&A activity , whereas in 2011, M&A activity .