Question 1

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 2

An investor is analyzing two firms in the same industry. She is looking for long term performance from her investment. Both firms are basically identical except one firm is involved in substantial downsizing and the other firm is undertaking aggressive downscoping. The investor should invest in the

Accepted Answer

A)  downscoping firm because the higher debt load will discipline managers to act in shareholders' best interests. 
B)  downscoping firm because it will be focusing on the firm's core businesses. 
C)  downsizing firm because it will be making decisions based on tactical strategies. 
D)  downsizing firm because it is eliminating employees who are essentially "dead weight" and are dragging down the firm's profitability. 
A)  downscoping firm because the higher debt load will discipline managers to act in shareholders' best interests. 
B)  downscoping firm because it will be focusing on the firm's core businesses. 
C)  downsizing firm because it will be making decisions based on tactical strategies. 
D)  downsizing firm because it is eliminating employees who are essentially "dead weight" and are dragging down the firm's profitability.

Question 3

Problems associated with acquisitions include all of the following EXCEPT

Accepted Answer

A)  excess managerial focus on acquisitions. 
B)  difficulties integrating the two firms. 
C)  the high costs of financing the acquisition. 
D)  excessive time spent on the due diligence process. 
A)  excess managerial focus on acquisitions. 
B)  difficulties integrating the two firms. 
C)  the high costs of financing the acquisition. 
D)  excessive time spent on the due diligence process.

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Which of the following statements is FALSE?

Accepted Answer

A)  Synergy resulting from an acquisition generates gains in shareholder wealth beyond what they could achieve through diversification of their own portfolios. 
B)  Private synergy results when the combination of two firms yields competencies and capabilities that could not be achieved by combining with any other firm. 
C)  Although private synergy is easy to analyze, it is difficult to create. 
D)  Private synergy is more likely when the two firms in an acquisition have complementary assets. 
A)  Synergy resulting from an acquisition generates gains in shareholder wealth beyond what they could achieve through diversification of their own portfolios. 
B)  Private synergy results when the combination of two firms yields competencies and capabilities that could not be achieved by combining with any other firm. 
C)  Although private synergy is easy to analyze, it is difficult to create. 
D)  Private synergy is more likely when the two firms in an acquisition have complementary assets.

Question 6

In most nations, regulations limiting acquisition activity has been strengthened.

Accepted Answer

A) True 
 B)False

Question 7

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 8

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 9

The presence of barriers to entry in a particular market will generally make acquisitions ____ as an entry strategy.

Accepted Answer

A)  less likely 
B)  more likely 
C)  prohibitive 
D)  illegal 
A)  less likely 
B)  more likely 
C)  prohibitive 
D)  illegal

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Evidence suggests that firms using acquisitions as a substitute for internally developed innovations

Accepted Answer

A)  are able to offset the loss of research and development competencies by competencies in other areas. 
B)  extend their time-to-market for new product launches. 
C)  eventually encounter performance problems. 
D)  can leverage their core competencies across a broader range of products. 
A)  are able to offset the loss of research and development competencies by competencies in other areas. 
B)  extend their time-to-market for new product launches. 
C)  eventually encounter performance problems. 
D)  can leverage their core competencies across a broader range of products.

Question 12

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. Each 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 13

Internal product development is often viewed as

Accepted Answer

A)  carrying a high risk of failure. 
B)  the only reliable method of generating new products for the firm. 
C)  a quicker method of product launch than acquisition of another firm. 
D)  critical to the success of biotech and pharmaceutical firms. 
A)  carrying a high risk of failure. 
B)  the only reliable method of generating new products for the firm. 
C)  a quicker method of product launch than acquisition of another firm. 
D)  critical to the success of biotech and pharmaceutical firms.

Question 14

An acquisition of a firm in a highly related industry is referred to as a horizontal acquisition.

Accepted Answer

A) True 
 B)False

Question 15

What are the results of the three forms of restructuring?

Accepted Answer

Downsizing usually does not lead to high

Question 16

Mittal Steel, the world's largest producer of steel, is headquartered in the Netherlands and has operations on four continents. It acquired U.S.-based ISG, a U.S.-owned steel company, in 2004. This is an example of both a cross-border acquisition and

Accepted Answer

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

Question 17

Two existing U.S. airlines, American West Airlines and U.S. Airways, have merged. The purpose of this merger is most likely to ____ and constitutes ____ action.

Accepted Answer

A)  increased diversification; vertical 
B)  increase market power; horizontal 
C)  overcome entry barriers; vertical 
D)  increase speed to market; related 
A)  increased diversification; vertical 
B)  increase market power; horizontal 
C)  overcome entry barriers; vertical 
D)  increase speed to market; related

Question 18

Transaction costs include all of the following EXCEPT

Accepted Answer

A)  charges from investment bankers who complete due diligence for the acquiring firm. 
B)  the loss of key employees following the acquisition. 
C)  managers' time spent evaluating target firms. 
D)  managers' time spent planning the diversification strategy of the firm. 
A)  charges from investment bankers who complete due diligence for the acquiring firm. 
B)  the loss of key employees following the acquisition. 
C)  managers' time spent evaluating target firms. 
D)  managers' time spent planning the diversification strategy of the firm.

Question 19

Cross-border acquisitions involve

Accepted Answer

A)  acquisitions by firms from developing countries of firms in developed countries. 
B)  acquisitions by firms from developed countries of firms in developing countries. 
C)  acquisitions made by firms both within and between developed and developing countries. 
D)  none of the above. 
A)  acquisitions by firms from developing countries of firms in developed countries. 
B)  acquisitions by firms from developed countries of firms in developing countries. 
C)  acquisitions made by firms both within and between developed and developing countries. 
D)  none of the above.

Question 20

Magma, Inc., acquired Vulcan, Inc., three 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.

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

An investor is analyzing two firms in the same industry. She is looking for long term performance from her investment. Both firms are basically identical except one firm is involved in substantial downsizing and the other firm is undertaking aggressive downscoping. The investor should invest in the

Problems associated with acquisitions include all of the following EXCEPT

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

Which of the following statements is FALSE?

In most nations, regulations limiting acquisition activity has been strengthened.

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

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

The presence of barriers to entry in a particular market will generally make acquisitions ____ as an entry strategy.

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

Evidence suggests that firms using acquisitions as a substitute for internally developed innovations

Internal product development is often viewed as

An acquisition of a firm in a highly related industry is referred to as a horizontal acquisition.

What are the results of the three forms of restructuring?

Mittal Steel, the world's largest producer of steel, is headquartered in the Netherlands and has operations on four continents. It acquired U.S.-based ISG, a U.S.-owned steel company, in 2004. This is an example of both a cross-border acquisition and

Two existing U.S. airlines, American West Airlines and U.S. Airways, have merged. The purpose of this merger is most likely to and constitutes action.

Transaction costs include all of the following EXCEPT

Cross-border acquisitions involve

Magma, Inc., acquired Vulcan, Inc., three 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: Acquisition and Restructuring Strategies

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

An investor is analyzing two firms in the same industry. She is looking for long term performance from her investment. Both firms are basically identical except one firm is involved in substantial downsizing and the other firm is undertaking aggressive downscoping. The investor should invest in the

Problems associated with acquisitions include all of the following EXCEPT

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

Which of the following statements is FALSE?

In most nations, regulations limiting acquisition activity has been strengthened.

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

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

The presence of barriers to entry in a particular market will generally make acquisitions ____ as an entry strategy.

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

Evidence suggests that firms using acquisitions as a substitute for internally developed innovations

Internal product development is often viewed as

An acquisition of a firm in a highly related industry is referred to as a horizontal acquisition.

What are the results of the three forms of restructuring?

Mittal Steel, the world's largest producer of steel, is headquartered in the Netherlands and has operations on four continents. It acquired U.S.-based ISG, a U.S.-owned steel company, in 2004. This is an example of both a cross-border acquisition and

Two existing U.S. airlines, American West Airlines and U.S. Airways, have merged. The purpose of this merger is most likely to ____ and constitutes ____ action.

Transaction costs include all of the following EXCEPT

Cross-border acquisitions involve

Magma, Inc., acquired Vulcan, Inc., three 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

Two existing U.S. airlines, American West Airlines and U.S. Airways, have merged. The purpose of this merger is most likely to and constitutes action.