Exam 14: External Growth Strategies: Mergers, Acquisitions, and Alliances

In Capron and Mitchell's decision framework for selecting the right growth path, if a firm finds that its resources and capabilities do not fit with its current strategy, then acquisition should be first option considered and internal development the last option.

Which are the following statements about pre-merger planning is untrue?

What distinguishes a joint venture from other types of strategic alliance is that in a joint venture:

The key difference between a merger and an acquisition is that, in the case of a merger, the participating companies combine to create a new company.

An important lesson from the troubled development of Boeing's 787 Dreamliner is that, for developing complex, technically-advanced products, the hub firm needs to have the capability to manage networks of strategic alliances.

Acquiring companies typically pay between 20% and 40% more than the pre-bid market capitalization to acquire target companies.The main reason for this sizable acquisition premium is:

In technology-based industries, the most common reason for established companies to acquire small, start-up firms is in order to:

Strategic alliances frequently play an important role in a firm's internationalization strategy because:

The fact that acquisitions impose substantial costs on acquiring firms (including both the acquisition premium and legal and advisory fees) implies that:

The tendency for M&A activity is highly cyclical, with a heavy clustering in specific sectors reflects:

The forces that gave rise the created the industrial districts of Italy are essentially the same as those that have caused clustering of film production companies in Hollywood and electronics and IT companies in Silicon Valley.

Identifying the strategic rationale and likely benefits of mergers and acquisitions is easier in the case of diversifying mergers and acquisitions than for horizontal mergers and acquisitions.

The continuing popularity of mergers and acquisitions among companies despite the lack of empirical evidence of their benefits suggests:

Reckitt Benckiser's multiple acquisitions of consumer products companies has been motivated by its quest for:

The main parallel between the merger boom in the US at the end of the 19^th century and the recent merger boom in the chemicals, beer, food, media and communications, and pharmaceutical industries is that both involves horizontal mergers and resulted in the creation of market-dominating companies:

For acquiring firms, empirical studies show that, on average, the returns to shareholders are:

Mergers and acquisitions represent paradoxes in the sense that:

Acquisition is the preferred mode of diversification for most firms because: