Question 1

There are few true mergers because:

Accepted Answer

A)  few firms have complementary resources. 
B)  integration problems are more severe than in outright acquisitions. 
C)  one firm usually dominates in terms of market share, size, or value of assets. 
D)  of managerial resistance. True mergers result in significant managerial-level layoffs. 
A)  few firms have complementary resources. 
B)  integration problems are more severe than in outright acquisitions. 
C)  one firm usually dominates in terms of market share, size, or value of assets. 
D)  of managerial resistance. True mergers result in significant managerial-level layoffs.

Question 2

The relatively strong U.S. dollar has increased the interest of firms from other nations to acquire U.S. companies.

Accepted Answer

A) True 
 B)False

Question 3

Acquisitions can become a time sink for top level managers for all the following reasons EXCEPT:

Accepted Answer

A)  the integration process after acquisition requires managerial attention. 
B)  they must prepare for acquisition negotiations. 
C)  managers are involved in the search for viable acquisition candidates. 
D)  only top managers can perform the required due diligence. 
A)  the integration process after acquisition requires managerial attention. 
B)  they must prepare for acquisition negotiations. 
C)  managers are involved in the search for viable acquisition candidates. 
D)  only top managers can perform the required due diligence.

Question 4

Junk bonds are now used more frequently to finance acquisitions primarily because of the belief that debt disciplines managers.

Accepted Answer

A) True 
 B)False

Question 5

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 6

The expenses incurred by firms trying to create synergy through acquisition are called ____ costs.

Accepted Answer

A)  differentiation 
B)  diversification 
C)  transaction 
D)  interaction 
A)  differentiation 
B)  diversification 
C)  transaction 
D)  interaction

Question 7

A related acquisition involves two firms in the same industry.

Accepted Answer

A) True 
 B)False

Question 8

A leveraged buyout refers to:

Accepted Answer

A)  a firm restructuring itself by selling off unrelated units of the company's portfolio. 
B)  a firm pursuing its core competencies by seeking to build a top management team that comes from a similar background. 
C)  a restructuring action whereby a party buys all of the assets of a business, financed largely with debt, and takes the firm private. 
D)  an action where the management of the firm and/or an external party buys all of the assets of a business financed largely with equity. 
A)  a firm restructuring itself by selling off unrelated units of the company's portfolio. 
B)  a firm pursuing its core competencies by seeking to build a top management team that comes from a similar background. 
C)  a restructuring action whereby a party buys all of the assets of a business, financed largely with debt, and takes the firm private. 
D)  an action where the management of the firm and/or an external party buys all of the assets of a business financed largely with equity.

Question 9

One of the most effective ways to test the feasibility of a future merger or acquisition is for the firms to first engage in a strategic alliance.

Accepted Answer

A) True 
 B)False

Question 10

Research suggests that horizontal acquisitions of firms with dissimilar characteristics result in higher performance levels.

Accepted Answer

A) True 
 B)False

Question 11

Horizontal, vertical, and related acquisitions to build market power:

Accepted Answer

A)  are likely to undergo regulatory review and analysis by financial markets. 
B)  are rarely permitted to occur across international borders. 
C)  typically involve a firm purchasing one of its suppliers or distributors. 
D)  concentrate on capturing value at more than one stage in the value chain. 
A)  are likely to undergo regulatory review and analysis by financial markets. 
B)  are rarely permitted to occur across international borders. 
C)  typically involve a firm purchasing one of its suppliers or distributors. 
D)  concentrate on capturing value at more than one stage in the value chain.

Question 12

Problems associated with acquisitions include all of the following EXCEPT:

Accepted Answer

A)  managers overly focused on acquisitions. 
B)  integration difficulties. 
C)  large or extraordinary debt. 
D)  excessive time spent on the due diligence process. 
A)  managers overly focused on acquisitions. 
B)  integration difficulties. 
C)  large or extraordinary debt. 
D)  excessive time spent on the due diligence process.

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

A friendly acquisition:

Accepted Answer

A)  raises the price that has to be paid for a firm. 
B)  enhances the complementarity of the two firms' assets. 
C)  facilitates the integration of the acquired and acquiring firms. 
D)  allows joint ventures to be developed. 
A)  raises the price that has to be paid for a firm. 
B)  enhances the complementarity of the two firms' assets. 
C)  facilitates the integration of the acquired and acquiring firms. 
D)  allows joint ventures to be developed.

Question 15

The current Chinese cross-border strategy is to focus on buying global brands, sales networks, and goodwill in branded products.

Accepted Answer

A) True 
 B)False

Question 16

Cross-border acquisitions are primarily made to:

Accepted Answer

A)  reshape the firm's competitive scope. 
B)  reduce the cost of new product development. 
C)  take advantage of higher education levels of labor in developed countries. 
D)  overcome barriers to entry in another country. 
A)  reshape the firm's competitive scope. 
B)  reduce the cost of new product development. 
C)  take advantage of higher education levels of labor in developed countries. 
D)  overcome barriers to entry in another country.

Question 17

Entering new markets through acquisitions of companies with new products is not risk-free, especially if acquisition becomes a substitute for:

Accepted Answer

A)  market discipline. 
B)  innovation. 
C)  risk analysis. 
D)  international diversification. 
A)  market discipline. 
B)  innovation. 
C)  risk analysis. 
D)  international diversification.

Question 18

One of the potential problems associated with acquisitions is that the additional costs required to manage the larger firm will exceed the benefits of economies of scale and additional market power.

Accepted Answer

A) True 
 B)False

Question 19

Identify and explain the seven reasons firms engage in an acquisition strategy.

Accepted Answer

(1) Increased market power. Market power

Question 20

Magma, Inc., acquired Vulcan, Inc., 3 years ago. Effective integration of the two companies' culture was never achieved, and the two firms' assets were not complementary. It is very likely that Magma will:

Accepted Answer

A)  go public through an IPO. 
B)  review the due diligence information collected before the acquisition. 
C)  restructure. 
D)  review its tactical-level strategies. 
A)  go public through an IPO. 
B)  review the due diligence information collected before the acquisition. 
C)  restructure. 
D)  review its tactical-level strategies.

There are few true mergers because:

The relatively strong U.S. dollar has increased the interest of firms from other nations to acquire U.S. companies.

Acquisitions can become a time sink for top level managers for all the following reasons EXCEPT:

Junk bonds are now used more frequently to finance acquisitions primarily because of the belief that debt disciplines managers.

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:

The expenses incurred by firms trying to create synergy through acquisition are called ____ costs.

A related acquisition involves two firms in the same industry.

A leveraged buyout refers to:

One of the most effective ways to test the feasibility of a future merger or acquisition is for the firms to first engage in a strategic alliance.

Research suggests that horizontal acquisitions of firms with dissimilar characteristics result in higher performance levels.

Horizontal, vertical, and related acquisitions to build market power:

Problems associated with acquisitions include all of the following EXCEPT:

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

A friendly acquisition:

The current Chinese cross-border strategy is to focus on buying global brands, sales networks, and goodwill in branded products.

Cross-border acquisitions are primarily made to:

Entering new markets through acquisitions of companies with new products is not risk-free, especially if acquisition becomes a substitute for:

One of the potential problems associated with acquisitions is that the additional costs required to manage the larger firm will exceed the benefits of economies of scale and additional market power.

Identify and explain the seven reasons firms engage in an acquisition strategy.

Magma, Inc., acquired Vulcan, Inc., 3 years ago. Effective integration of the two companies' culture was never achieved, and the two firms' assets were not complementary. It is very likely that Magma will:

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

There are few true mergers because:

The relatively strong U.S. dollar has increased the interest of firms from other nations to acquire U.S. companies.

Acquisitions can become a time sink for top level managers for all the following reasons EXCEPT:

Junk bonds are now used more frequently to finance acquisitions primarily because of the belief that debt disciplines managers.

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:

The expenses incurred by firms trying to create synergy through acquisition are called ____ costs.

A related acquisition involves two firms in the same industry.

A leveraged buyout refers to:

One of the most effective ways to test the feasibility of a future merger or acquisition is for the firms to first engage in a strategic alliance.

Research suggests that horizontal acquisitions of firms with dissimilar characteristics result in higher performance levels.

Horizontal, vertical, and related acquisitions to build market power:

Problems associated with acquisitions include all of the following EXCEPT:

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

A friendly acquisition:

The current Chinese cross-border strategy is to focus on buying global brands, sales networks, and goodwill in branded products.

Cross-border acquisitions are primarily made to:

Entering new markets through acquisitions of companies with new products is not risk-free, especially if acquisition becomes a substitute for:

One of the potential problems associated with acquisitions is that the additional costs required to manage the larger firm will exceed the benefits of economies of scale and additional market power.

Identify and explain the seven reasons firms engage in an acquisition strategy.

Magma, Inc., acquired Vulcan, Inc., 3 years ago. Effective integration of the two companies' culture was never achieved, and the two firms' assets were not complementary. It is very likely that Magma will:

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