Question 1

In a market-expansion acquisition, the acquiring company expands its product line by purchasing another company.

Accepted Answer

A) True 
 B)False

Question 2

Managers may be willing to compromise shareholder interests and make acquisitions that do nothing more than increase the size of the firm.

Accepted Answer

A) True 
 B)False

Question 3

All of the following are possible motives behind mergers and acquisitions except ________.

Accepted Answer

A)  managerial self-interest 
B)  synergy 
C)  community development 
D)  hubris 
A)  managerial self-interest 
B)  synergy 
C)  community development 
D)  hubris

Question 4

Firms may find internal development preferable to acquisitions for all of the following reasons except ________.

Accepted Answer

A)  acquisitions are less expensive than internal development 
B)  internal development entails incremental investment over time 
C)  acquisitions are all-or-nothing propositions 
D)  organizational conflict is more likely during acquisitions 
A)  acquisitions are less expensive than internal development 
B)  internal development entails incremental investment over time 
C)  acquisitions are all-or-nothing propositions 
D)  organizational conflict is more likely during acquisitions

Question 5

Research suggests that firms average about ________ acquisition(s) per year.

Accepted Answer

A)  4 
B)  3 
C)  2 
D)  1 
A)  4 
B)  3 
C)  2 
D)  1

Question 6

In a geographic roll-up acquisition, the objectives include ________.

Accepted Answer

A)  efficiency of larger operations 
B)  synergy of similar but expanded product lines or geographic markets 
C)  eliminating capacity, gaining market share, and increasing efficiency 
D)  anticipation of new industry emerging and culling resources from firms in multiple industries whose boundaries are eroding 
A)  efficiency of larger operations 
B)  synergy of similar but expanded product lines or geographic markets 
C)  eliminating capacity, gaining market share, and increasing efficiency 
D)  anticipation of new industry emerging and culling resources from firms in multiple industries whose boundaries are eroding

Question 7

Managers may make acquisitions in order to increase earnings by diversifying the firm's revenue stream.

Accepted Answer

A) True 
 B)False

Question 8

Mergers and acquisitions are recognized as strategies in and of themselves.

Accepted Answer

A) True 
 B)False

Question 9

Hubristic managers may underestimate their own abilities to implement potential synergies.

Accepted Answer

A) True 
 B)False

Question 10

Acquisitions in which firms purchase their customers are called ________ acquisitions.

Accepted Answer

A)  downstream vertical 
B)  downstream horizontal 
C)  upstream vertical 
D)  upstream horizontal 
A)  downstream vertical 
B)  downstream horizontal 
C)  upstream vertical 
D)  upstream horizontal

Question 11

Advantages of choosing acquisition over internal development include all except which of the following?

Accepted Answer

A)  speed 
B)  immediate critical mass 
C)  access to complementary assets and resources 
D)  leveraging in-house design technology 
A)  speed 
B)  immediate critical mass 
C)  access to complementary assets and resources 
D)  leveraging in-house design technology

Question 12

Revenue-enhancement opportunities are known as synergies.

Accepted Answer

A) True 
 B)False

Question 13

What is the difference between intrinsic and market values?

Accepted Answer

Intrinsic value is the present value of

Question 14

The basic category of ________ motives for mergers and acquisitions usually reflects shareholders' best interests.

Accepted Answer

A)  hubris 
B)  managerial self-interest 
C)  synergy 
D)  synchronicity 
A)  hubris 
B)  managerial self-interest 
C)  synergy 
D)  synchronicity

Question 15

A Greek term used in business to denote excess pride, overconfidence, or arrogance is ________.

Accepted Answer

A)  synergy 
B)  polycon 
C)  halycon 
D)  hubris 
A)  synergy 
B)  polycon 
C)  halycon 
D)  hubris

Question 16

When industries overlap, there is a reduction in the level of mergers and acquisitions in the intersecting industries.

Accepted Answer

A) True 
 B)False

Question 17

If a company improves its competitive position by means of a merger or acquisition, it may be possible to derive potential market power from the deal.

Accepted Answer

A) True 
 B)False

Question 18

Divestiture is a simple form of acquisition.

Accepted Answer

A) True 
 B)False

Question 19

Transferring best practices and core competencies can create value.

Accepted Answer

A) True 
 B)False

Question 20

Mergers may be designed to improve market access for both companies in geographic markets where individually they are weak.

Accepted Answer

A) True 
 B)False

In a market-expansion acquisition, the acquiring company expands its product line by purchasing another company.

Managers may be willing to compromise shareholder interests and make acquisitions that do nothing more than increase the size of the firm.

All of the following are possible motives behind mergers and acquisitions except ________.

Firms may find internal development preferable to acquisitions for all of the following reasons except ________.

Research suggests that firms average about ________ acquisition(s) per year.

In a geographic roll-up acquisition, the objectives include ________.

Managers may make acquisitions in order to increase earnings by diversifying the firm's revenue stream.

Mergers and acquisitions are recognized as strategies in and of themselves.

Hubristic managers may underestimate their own abilities to implement potential synergies.

Acquisitions in which firms purchase their customers are called ________ acquisitions.

Advantages of choosing acquisition over internal development include all except which of the following?

Revenue-enhancement opportunities are known as synergies.

What is the difference between intrinsic and market values?

The basic category of ________ motives for mergers and acquisitions usually reflects shareholders' best interests.

A Greek term used in business to denote excess pride, overconfidence, or arrogance is ________.

When industries overlap, there is a reduction in the level of mergers and acquisitions in the intersecting industries.

If a company improves its competitive position by means of a merger or acquisition, it may be possible to derive potential market power from the deal.

Divestiture is a simple form of acquisition.

Transferring best practices and core competencies can create value.

Mergers may be designed to improve market access for both companies in geographic markets where individually they are weak.

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

In a market-expansion acquisition, the acquiring company expands its product line by purchasing another company.

Managers may be willing to compromise shareholder interests and make acquisitions that do nothing more than increase the size of the firm.

All of the following are possible motives behind mergers and acquisitions except ________.

Firms may find internal development preferable to acquisitions for all of the following reasons except ________.

Research suggests that firms average about ________ acquisition(s) per year.

In a geographic roll-up acquisition, the objectives include ________.

Managers may make acquisitions in order to increase earnings by diversifying the firm's revenue stream.

Mergers and acquisitions are recognized as strategies in and of themselves.

Hubristic managers may underestimate their own abilities to implement potential synergies.

Acquisitions in which firms purchase their customers are called ________ acquisitions.

Advantages of choosing acquisition over internal development include all except which of the following?

Revenue-enhancement opportunities are known as synergies.

What is the difference between intrinsic and market values?

The basic category of ________ motives for mergers and acquisitions usually reflects shareholders' best interests.

A Greek term used in business to denote excess pride, overconfidence, or arrogance is ________.

When industries overlap, there is a reduction in the level of mergers and acquisitions in the intersecting industries.

If a company improves its competitive position by means of a merger or acquisition, it may be possible to derive potential market power from the deal.

Divestiture is a simple form of acquisition.

Transferring best practices and core competencies can create value.

Mergers may be designed to improve market access for both companies in geographic markets where individually they are weak.

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