Question 1

Strategy is important to every firm, but the Internet changes quarterly, which elevates strategy to a mission-critical task.

Accepted Answer

A) True 
 B)False  True

Question 2

Sometimes a supplier cannot or will not make an investment that is specific to an exchange with one buyer.

Accepted Answer

A) True 
 B)False  True

Question 3

Discuss the drawbacks of acquisitions over internal development.

Accepted Answer

Firms may find it preferable for several reasons to enter new businesses by means of internal development. First, acquisitions are often more expensive than internal development. Buyers often pay steep premiums for existing companies. In many cases, these premiums outweigh any potential benefits of the acquisition, and in some cases, they make it economically more viable either to enter through internal development or to avoid entry altogether. In short, firms must often decide against entering new businesses because they aren't likely to generate sufficient return on capital to justify the premium cost. In addition, the acquiring firm will often inherit several unnecessary adjunct businesses. An acquirer must either be willing to run these unwanted businesses or go through the administrative hassle of spinning them off.
Second, although acquisitions represent a major one-time commitment of resources, internal development entails incremental investment over time. The internal-development process, therefore, allows for many points at which the project can be assessed and reevaluated before further investment is made. If, for example, economic circumstances change, a firm can pull the plug. Acquisitions, on the other hand, are typically all-or-nothing propositions.
Finally, organizational conflict may emerge as a potential problem; the eruption of cultural clashes can impede the integration of two firms. The process of integration requires significant effort, and firms may encounter setbacks or even failure. Many potential roadblocks can make it difficult for firms to realize economic gains from acquisitions. Taken together, the greater the cost in capital and time, the more synergies managers will have to squeeze out of the deal.

Question 4

The larger the target firm, the shorter the time it will take to absorb it.

Accepted Answer

A) True 
 B)False

Question 5

All of the following are possible stages in the industry life cycle except ________.

Accepted Answer

A)  introduction 
B)  erosion 
C)  growth 
D)  maturity 
A)  introduction 
B)  erosion 
C)  growth 
D)  maturity

Question 6

Mergers and acquisitions in converging industries will put firms at a disadvantage when industry boundaries erode.

Accepted Answer

A) True 
 B)False

Question 7

Mergers of equals are typically between firms of relatively equal size and influence.

Accepted Answer

A) True 
 B)False

Question 8

Explain some of the possible sources for synergy.

Accepted Answer

Synergy may derive from a number of sour

Question 9

What are some of the benefits of acquisition over internal development?

Accepted Answer

One of the primary advantages of acquisi

Question 10

What are some of the drawbacks of acquisition over internal development?

Accepted Answer

Firms may find it preferable for several

Question 11

Acquisitions that result in diversification are used in the staging of corporate strategies.

Accepted Answer

A) True 
 B)False

Question 12

Acquisitions in a(n) ________ environment are attempts by companies to acquire resources that will be critical in future projected new industry contexts.

Accepted Answer

A)  industry-convergence 
B)  hostile takeover 
C)  internally competitive 
D)  international conglomerate 
A)  industry-convergence 
B)  hostile takeover 
C)  internally competitive 
D)  international conglomerate

Question 13

Why is it important for managers to be specific in identifying the possible benefits and problems of an acquisition?

Accepted Answer

Managers should be as specific as possib

Question 14

Diversification of a firm's revenue stream creates immense value for shareholders.

Accepted Answer

A) True 
 B)False

Question 15

Financial markets tend to not accept cost savings as a rationale and are less likely to reward savings-motivated mergers and acquisitions with higher stock prices.

Accepted Answer

A) True 
 B)False

Question 16

The combination of two or more firms through a pooling of interest is referred to as a(n) ________.

Accepted Answer

A)  acquisition 
B)  merger 
C)  procurement 
D)  appropriation 
A)  acquisition 
B)  merger 
C)  procurement 
D)  appropriation

Question 17

What is managerialism?

Accepted Answer

Managerialism is the tendency

Question 18

How do sharing and leveraging capabilities lead to synergy?

Accepted Answer

Transferring best practices and core com

Question 19

Managers may willingly overpay in mergers and acquisitions in order to maximize their own interests.

Accepted Answer

A) True 
 B)False

Question 20

List the four stages of the acquisition process.

Accepted Answer

The four stages in a

Strategy is important to every firm, but the Internet changes quarterly, which elevates strategy to a mission-critical task.

Sometimes a supplier cannot or will not make an investment that is specific to an exchange with one buyer.

Discuss the drawbacks of acquisitions over internal development.

The larger the target firm, the shorter the time it will take to absorb it.

All of the following are possible stages in the industry life cycle except ________.

Mergers and acquisitions in converging industries will put firms at a disadvantage when industry boundaries erode.

Mergers of equals are typically between firms of relatively equal size and influence.

Explain some of the possible sources for synergy.

What are some of the benefits of acquisition over internal development?

What are some of the drawbacks of acquisition over internal development?

Acquisitions that result in diversification are used in the staging of corporate strategies.

Acquisitions in a(n) ________ environment are attempts by companies to acquire resources that will be critical in future projected new industry contexts.

Why is it important for managers to be specific in identifying the possible benefits and problems of an acquisition?

Diversification of a firm's revenue stream creates immense value for shareholders.

Financial markets tend to not accept cost savings as a rationale and are less likely to reward savings-motivated mergers and acquisitions with higher stock prices.

The combination of two or more firms through a pooling of interest is referred to as a(n) ________.

What is managerialism?

How do sharing and leveraging capabilities lead to synergy?

Managers may willingly overpay in mergers and acquisitions in order to maximize their own interests.

List the four stages of the acquisition process.

Introducing Strategic Management

Leading Strategically Through Effective Vision and Mission

Examining the Internal Environment: Resources

Exploring the External Environment: Macro Industry and Dynamics

Creating Business Strategies

Crafting Business Strategy of Dynamic Contexts

Developing Corporate Strategy

Looking at International Strategies

Understanding Alliances and Cooperative Strategies

Organizational Structure, Systems, and Processes

Considering New Ventures and Corporate Renewal

Corporate Governance in the Twenty-First Century

Filters

Exam 10: Studying Merges and Acquisitions

Strategy is important to every firm, but the Internet changes quarterly, which elevates strategy to a mission-critical task.

Sometimes a supplier cannot or will not make an investment that is specific to an exchange with one buyer.

Discuss the drawbacks of acquisitions over internal development.

The larger the target firm, the shorter the time it will take to absorb it.

All of the following are possible stages in the industry life cycle except ________.

Mergers and acquisitions in converging industries will put firms at a disadvantage when industry boundaries erode.

Mergers of equals are typically between firms of relatively equal size and influence.

Explain some of the possible sources for synergy.

What are some of the benefits of acquisition over internal development?

What are some of the drawbacks of acquisition over internal development?

Acquisitions that result in diversification are used in the staging of corporate strategies.

Acquisitions in a(n) ________ environment are attempts by companies to acquire resources that will be critical in future projected new industry contexts.

Why is it important for managers to be specific in identifying the possible benefits and problems of an acquisition?

Diversification of a firm's revenue stream creates immense value for shareholders.

Financial markets tend to not accept cost savings as a rationale and are less likely to reward savings-motivated mergers and acquisitions with higher stock prices.

The combination of two or more firms through a pooling of interest is referred to as a(n) ________.

What is managerialism?

How do sharing and leveraging capabilities lead to synergy?

Managers may willingly overpay in mergers and acquisitions in order to maximize their own interests.

List the four stages of the acquisition process.

Introducing Strategic Management

Leading Strategically Through Effective Vision and Mission

Examining the Internal Environment: Resources

Exploring the External Environment: Macro Industry and Dynamics

Creating Business Strategies

Crafting Business Strategy of Dynamic Contexts

Developing Corporate Strategy

Looking at International Strategies

Understanding Alliances and Cooperative Strategies

Organizational Structure, Systems, and Processes

Considering New Ventures and Corporate Renewal

Corporate Governance in the Twenty-First Century

Filters