Question 1

Research shows that about ____ percent of mergers and acquisitions are successful.

Accepted Answer

A)  20 
B)  40 
C)  60 
D)  80 
A)  20 
B)  40 
C)  60 
D)  80

Question 2

SpeakEasy, a U.S. software company that specializes in voice-recognition software, wishes to rapidly enter the growing technical translation software market. This market is dominated by firms making highly differentiated products. To enter this market, SpeakEasy would be best served if it considers a(an):

Accepted Answer

A)  vertical acquisition of a firm that uses technical translation products. 
B)  acquisition of a highly related firm in the technical translation market. 
C)  cross-border merger, preferably with an Indian or Chinese company. 
D)  strategy of internally developing the technical translation products needed to compete in this market. 
A)  vertical acquisition of a firm that uses technical translation products. 
B)  acquisition of a highly related firm in the technical translation market. 
C)  cross-border merger, preferably with an Indian or Chinese company. 
D)  strategy of internally developing the technical translation products needed to compete in this market.

Question 3

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 4

Junk bonds are a financing option through which risky acquisitions are financed with debt that provides a large potential return to bondholders.

Accepted Answer

A) True 
 B)False

Question 5

Manny Inc. recently completed the purchase of its primary supplier. Manny intends to begin expanding the market to which the suppliers' products are sold. This purchase is a(n):

Accepted Answer

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

Question 6

Research suggests that horizontal acquisitions result in higher performance when the firms have similar strategies, assets, and capabilities.

Accepted Answer

A) True 
 B)False

Question 7

The intent of the owners in a whole-firm leveraged buyout may be to increase the efficiency of the bought-out firm and resell it in 5-8 years. This tends to make the managers of the bought-out firm high-risk takers, since they will probably not survive the resale and thus have little to lose.

Accepted Answer

A) True 
 B)False

Question 8

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 of reduced debt costs and the emphasis on strategic controls derived from 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 of reduced debt costs and the emphasis on strategic controls derived from 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 9

Typically, in a failed acquisition, the organization will:

Accepted Answer

A)  restructure. 
B)  go into bankruptcy. 
C)  focus on building private synergy. 
D)  increase integration. 
A)  restructure. 
B)  go into bankruptcy. 
C)  focus on building private synergy. 
D)  increase integration.

Question 10

Research has shown that the more ____, the greater is the probability that an acquisition will be successful.

Accepted Answer

A)  related the acquired and acquiring firms are 
B)  diverse the resulting portfolio of competencies 
C)  disparate the corporate cultures 
D)  involved investment banking firms are in the due diligence process 
A)  related the acquired and acquiring firms are 
B)  diverse the resulting portfolio of competencies 
C)  disparate the corporate cultures 
D)  involved investment banking firms are in the due diligence process

Question 11

The term "leverage" in leveraged buyouts refers to the:

Accepted Answer

A)  firm's increased concentration on the firm's core competencies. 
B)  amount of new debt incurred in buying the firm. 
C)  fact that the employees are purchasing the firm for which they work. 
D)  process of removing the firm's stock from public trading. 
A)  firm's increased concentration on the firm's core competencies. 
B)  amount of new debt incurred in buying the firm. 
C)  fact that the employees are purchasing the firm for which they work. 
D)  process of removing the firm's stock from public trading.

Question 12

Due diligence includes all of the following activities EXCEPT assessing:

Accepted Answer

A)  differences in firm cultures. 
B)  tax consequences of the acquisition. 
C)  the level of private synergy between the two firms. 
D)  financing for intended transaction. 
A)  differences in firm cultures. 
B)  tax consequences of the acquisition. 
C)  the level of private synergy between the two firms. 
D)  financing for intended transaction.

Question 13

A merger is a strategy through which two firms agree to integrate their operations on a relatively coequal basis.

Accepted Answer

A) True 
 B)False

Question 14

Evidence suggests that acquisitions usually lead to favorable financial outcomes, especially for the acquiring firm.

Accepted Answer

A) True 
 B)False

Question 15

Caterpillar's payment of a 32 percent premium for the acquisition of Bucyrus in 2011 and subsequent need to issue more stock illustrates the acquisition problem of:

Accepted Answer

A)  integration difficulties. 
B)  inability to achieve synergy. 
C)  large or extraordinary debt. 
D)  managers overly focused on acquisitions. 
A)  integration difficulties. 
B)  inability to achieve synergy. 
C)  large or extraordinary debt. 
D)  managers overly focused on acquisitions.

Question 16

Market power is derived primarily from the:

Accepted Answer

A)  core competencies of the firm. 
B)  size of a firm and its resources and capabilities. 
C)  quality of a firm's top management team. 
D)  depth of a firm's strategy. 
A)  core competencies of the firm. 
B)  size of a firm and its resources and capabilities. 
C)  quality of a firm's top management team. 
D)  depth of a firm's strategy.

Question 17

One problem with becoming too large is that large firms:

Accepted Answer

A)  tend to have less market power. 
B)  have less potential for economies of scale. 
C)  become attractive takeover targets. 
D)  usually increase bureaucratic controls. 
A)  tend to have less market power. 
B)  have less potential for economies of scale. 
C)  become attractive takeover targets. 
D)  usually increase bureaucratic controls.

Question 18

Large or extraordinary debt is defined as overpaying for an acquired firm.

Accepted Answer

A) True 
 B)False

Question 19

What is restructuring and what are its common forms?

Accepted Answer

Restructuring refers to changes in a fir

Question 20

A merger is defined as a strategy in which one firm purchases controlling interest in another firm.

Accepted Answer

A) True 
 B)False

Research shows that about ____ percent of mergers and acquisitions are successful.

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

Junk bonds are a financing option through which risky acquisitions are financed with debt that provides a large potential return to bondholders.

Manny Inc. recently completed the purchase of its primary supplier. Manny intends to begin expanding the market to which the suppliers' products are sold. This purchase is a(n):

Research suggests that horizontal acquisitions result in higher performance when the firms have similar strategies, assets, and capabilities.

The intent of the owners in a whole-firm leveraged buyout may be to increase the efficiency of the bought-out firm and resell it in 5-8 years. This tends to make the managers of the bought-out firm high-risk takers, since they will probably not survive the resale and thus have little to lose.

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:

Typically, in a failed acquisition, the organization will:

Research has shown that the more ____, the greater is the probability that an acquisition will be successful.

The term "leverage" in leveraged buyouts refers to the:

Due diligence includes all of the following activities EXCEPT assessing:

A merger is a strategy through which two firms agree to integrate their operations on a relatively coequal basis.

Evidence suggests that acquisitions usually lead to favorable financial outcomes, especially for the acquiring firm.

Caterpillar's payment of a 32 percent premium for the acquisition of Bucyrus in 2011 and subsequent need to issue more stock illustrates the acquisition problem of:

Market power is derived primarily from the:

One problem with becoming too large is that large firms:

Large or extraordinary debt is defined as overpaying for an acquired firm.

What is restructuring and what are its common forms?

A merger is defined as a strategy in which one firm purchases controlling interest in another firm.

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

Research shows that about ____ percent of mergers and acquisitions are successful.

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

Junk bonds are a financing option through which risky acquisitions are financed with debt that provides a large potential return to bondholders.

Manny Inc. recently completed the purchase of its primary supplier. Manny intends to begin expanding the market to which the suppliers' products are sold. This purchase is a(n):

Research suggests that horizontal acquisitions result in higher performance when the firms have similar strategies, assets, and capabilities.

The intent of the owners in a whole-firm leveraged buyout may be to increase the efficiency of the bought-out firm and resell it in 5-8 years. This tends to make the managers of the bought-out firm high-risk takers, since they will probably not survive the resale and thus have little to lose.

Typically, in a failed acquisition, the organization will:

Research has shown that the more ____, the greater is the probability that an acquisition will be successful.

The term "leverage" in leveraged buyouts refers to the:

Due diligence includes all of the following activities EXCEPT assessing:

A merger is a strategy through which two firms agree to integrate their operations on a relatively coequal basis.

Evidence suggests that acquisitions usually lead to favorable financial outcomes, especially for the acquiring firm.

Caterpillar's payment of a 32 percent premium for the acquisition of Bucyrus in 2011 and subsequent need to issue more stock illustrates the acquisition problem of:

Market power is derived primarily from the:

One problem with becoming too large is that large firms:

Large or extraordinary debt is defined as overpaying for an acquired firm.

What is restructuring and what are its common forms?

A merger is defined as a strategy in which one firm purchases controlling interest in another firm.

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