Deck 12: Mergers and Acquisitions

Question 1

Who are the two parties involved in a vertical merger?

A)buyer and supplier
B)two competitors
C)management and employees
D)shareholders and executives

Answer 1

A

Question 2

If a company wants to reduce its dependency on a market that is cyclical in nature,what type of merger strategy should it choose?

A)integration
B)assimilation
C)diversification
D)consolidation

Answer 2

C

Question 3

What type of strategy is applied when the targeted company makes a counteroffer for the bidding firm?

A)hostile takeover
B)poison pill
C)white knight
D)Pac-Man

Answer 3

D

Question 4

Which of the following is typically NOT an item included in a contingency plan for a merger?

A)financial projections
B)negotiation skills training
C)methods of communicating
D)chain of command

Question 5

What is the growth strategy that results in the fastest growth for an organization?

A)leveraging current customers
B)opening new markets internationally
C)corporate joint ventures
D)mergers and acquisitions

Question 6

Which of the following is NOT a typical employee behaviour category during a merger?

A)not willing
B)not available
C)not able
D)not knowing

Question 7

What is one important benefit that an organization can offer its terminated employees?

A)access to organizational intranet and email
B)continuation of benefits for a certain time period
C)incentive plan that incorporates performance
D)buyouts that have cost-of-living adjustments

Question 8

What was one of the key factors that resulted in the successful merger of Rogers Communications Inc.with Fido?

A)Rogers ensured no job losses.
B)Rogers set up an intranet site.
C)Rogers paid a premium for Fido.
D)Rogers monitored the merger's progress.

Question 9

Following a merger,what is constructive dismissal?

A)Employees are demoted into a position of lesser status and compensation.
B)Employees receive a compensation package that satisfies their basic needs.
C)Employees are terminated using compassionate and sufficient compensation.
D)Employees receive substantially different compensation packages after the merger.

Question 10

Why was the merger of Alberta Energy with PanCanadian Energy deemed a stunning success?

A)The merger was extremely fast.
B)The merger was financially motivated.
C)The merger was employee-oriented.
D)The merger was focused on unionization.

Question 11

Why must the needs of management be considered as an important motivator for mergers?

A)Managers often consider their power and ego needs ahead of the needs of their organization.
B)Managers are unconsciously motivated by the game of corporate life and takeover challenges.
C)Managers are concerned only about their substantial incentives and salaries and not about their employees.
D)Managers have personality characteristics that result in acquisition behaviours and greed.

Question 12

If two competitors merge,what type of merger is created?

A)horizontal
B)vertical
C)linear
D)conglomerate

Question 13

If a book publishing company decides to merge with a pulp and paper mill for its paper needs,what type of merger would result?

A)horizontal
B)vertical
C)conglomerate
D)takeover

Question 14

Why must development programs,such as overseas assignments,be put on hold for managers during a merger?

A)Costs are prohibitive during a merger,so deferring overseas assignments is a cost-cutting measure.
B)Managers may require additional training to manage the reactions of their employees.
C)Managers cannot hide in another country to avoid being terminated with the merger.
D)It is important that managers be available to work out incentive and reward schemes.

Question 15

According to your textbook,what percentage of firms fail to produce any shareholder value following a merger?

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

Question 16

What is one benefit for organizations that apply due diligence in order to manage their culture during a merger?

A)lower absenteeism and attrition
B)improved job satisfaction
C)increased stock prices
D)higher revenues and profits

Question 17

According to your textbook,what percentage of all mergers fail due to the mismanagement of culture?

A)25 percent
B)45 percent
C)65 percent
D)85 percent

Question 18

If a company is able to use one set of inputs to produce a wider range of products and services,what is this ability called?

A)economies of scale
B)economy of advantage
C)economy of scope
D)economies of productivity

Question 19

Why must collective agreements be considered during a merger?

A)to follow the protocols for notification periods for layoffs and terminations
B)to help management create an environment of trust,fairness,and equity
C)to ensure that employees will continue to work with the same compensation
D)to interpret the legalities of downsizing and restructuring

Question 20

What was the main reason that the merger of Daimler-Benz and Chrysler failed?

A)The companies were rivals,and their communication channels never fully opened.
B)The merger was too time-consuming for the companies to worry about operations.
C)The companies were from two different countries and had different corporate cultures.
D)The two types of cars were expensive and inexpensive and consumers could not reconcile this.

Question 21

Which one of these factors may influence the success rate of a merger?

A)stress counselling for employees
B)industry sector of the merger
C)both companies being the same size
D)languages spoken by management

Question 22

There is strong public opinion against foreign ownership in Canada.What was one acquisition that the federal government recently blocked?

A)acquisition of Potash Inc.
B)acquisition of Inco.
C)acquisition of Petro-Canada
D)acquisition of Intrawest

Question 23

What is usually referred to as operating synergy?

A)economy-of-scope advantage
B)competitive advantage
C)economies of scale
D)economies-of-scale benefit

Question 24

Within what timeframe should the majority of anticipated synergies be captured and identified to ensure the success of the merger?

A)within the first quarter
B)within the first year
C)within two years
D)within five years

Question 25

Loblaws purchased Shoppers Drug Mart.What is this an example of?

A)acquisition
B)horizontal merger
C)consolidation
D)acquisition

Question 26

Which of the following is NOT one of the key areas that General Mills' transition team focused upon?

A)developing the systems that mattered most to employees
B)providing fair compensation and incentives to employees
C)sequencing the implementation of any new systems
D)using a climate survey to monitor employee feedback

Question 27

Merging two workplace cultures is difficult.What is it called when one company absorbs the other?

A)cultural integration
B)cultural pluralism
C)cultural assimilation
D)cultural transformation

Question 28

What is the most successful conglomerate in India?

A)Bank of India
B)Bharat
C)VSLN
D)Tata

Question 29

What is it called when one company seeks to acquire another company?

A)consolidation
B)conglomerate
C)vertical merger
D)takeover

Question 30

If two competing companies merged to increase market power,what type of merger would result?

A)acquisition
B)horizontal
C)conglomerate
D)vertical

Question 31

What is it called when two cultures fuse and evolve into a brand new culture?

A)integration
B)assimilation
C)separation
D)deculturation

Question 32

A university and college in the same city decide to merge.What type of benefits do these academic institutions benefit from?

A)strategic and financial benefits
B)cost savings and resource allocation benefits
C)increased federal government grants and funding
D)improved employee and student resources

Question 33

How many person-hours did the executives of HP and Compaq spend in planning for the merger integration?

A)more than fifty thousand but less than one hundred thousand
B)more than one hundred thousand but less than five hundred thousand
C)more than a half million but less than one million
D)more than one million

Question 34

Merging two workplace cultures is difficult.What is it called when two company partners co-exist?

A)cultural pluralism
B)cultural integration
C)cultural assimilation
D)cultural transformation

Question 35

What are three motives for a company to decide to merge?

A)financial benefits,management needs,and increased resources
B)strategic benefits,management needs,and increased resources
C)strategic benefits,financial benefits,and management needs
D)CEO desires,cost savings,and resource benefits

Question 36

What is it called when two or more companies join together and form an entirely new company?

A)conglomerate
B)vertical merger
C)consolidation
D)horizontal merger

Question 37

If a company is able reduce costs by a corporate combination,what is this ability called?

A)economy-of-scope advantage
B)economy of advantage
C)economies of scale
D)economies of productivity

Question 38

If a real estate agency decides to merge with a real estate developer to achieve the synergies of controlling all factors affecting the company's success,what type of merger would result?

A)horizontal
B)vertical
C)conglomerate
D)takeover

Question 39

What are the three primary reasons that companies create mergers?

A)financial benefits,needs of management,human resource benefits
B)financial benefits,strategic benefits,competitive benefits
C)financial benefits,needs of management,strategic benefits
D)global benefits,competitive benefits,human resource benefits

Question 40

What is one financial benefit of a merger?

A)tax advantages
B)reduced debt load
C)increased stock price
D)higher productivity

Question 41

One option for those involved in merging cultures is for the partner companies to abandon key elements of their current cultures and adopt new norms.What is this called?

A)cultural pluralism
B)cultural transformation
C)cultural integration
D)cultural assimilation

Question 42

Mergers are forged for what reasons?

A)financial and human
B)human and strategic
C)strategic and financial
D)functional and operational

Question 43

According to researchers,four options are open to those involved in merging cultures.Which of the following is NOT an option?

A)cultural pluralism
B)cultural inspiration
C)cultural assimilation
D)cultural transformation

Question 44

Mergers succeed or fail for what reasons?

A)human
B)strategic
C)financial
D)operational

Question 45

What issues are responsible for the failure of one-third to one-half of mergers?

A)strategic
B)financial
C)employee
D)organizational

Question 46

A horizontal merger occurs between a buyer and a supplier.

Question 47

One option for those involved in merging cultures is for the partner organizations to blend current cultures together.What is this called?

A)cultural pluralism
B)cultural integration
C)cultural assimilation
D)cultural transformation

Question 48

Which of the following is an HR planning issue in mergers that is NOT part of the normal planning process?

A)reduction planning
B)HR due diligence
C)HRIS
D)HR demand estimations

Question 49

Who are the two parties involved in a horizontal merger?

A)buyer and supplier
B)two competitors
C)management and employees
D)shareholders and executives

Question 50

Merging two organizational cultures is challenging.What is it called when the partner organizations blend current cultures together?

A)cultural integration
B)cultural assimilation
C)cultural transformation
D)cultural pluralism

Question 51

What is the percentage of all merger failure due to the mismanagement of the organization's culture?

A)90 percent
B)65 percent
C)50 percent
D)85 percent

Question 52

Horizontal integration is the merger or acquisition of two organizations that have a buyer-seller relationship.

Question 53

Culture refers to the set of important beliefs that members of an organization share.

Question 54

Which of the following is an HR planning issue in acquisitions that is NOT part of the normal planning process?

A)transition team implementation
B)reduction planning
C)HRIS
D)HR demand forecasts

Question 55

Who are the two parties involved in a conglomerate merger?

A)buyer and supplier
B)two competitors
C)two organizations competing in different markets
D)shareholders and competitors

Question 56

One option for those involved in merging cultures is for one company (usually the acquirer)to absorb the other.What is this called?

A)cultural pluralism
B)cultural integration
C)cultural assimilation
D)cultural transformation

Question 57

A conglomerate merger is the merger of two organizations competing in different markets.

Question 58

Typically,mergers and acquisitions do not result in layoffs or the reduction of the size of the workforce.

Question 59

Merging two organizational cultures is challenging.What is it called when the partner companies abandon key elements of their current cultures and adopt new norms?

A)cultural pluralism
B)cultural transformation
C)cultural integration
D)cultural assimilation

Question 60

If one company merges with another company but the two companies have no competitive or buyer-seller relationship,what type of merger would result?

A)vertical
B)horizontal
C)conglomerate
D)acquisition

Question 61

Assimilation is when two organizational cultures are fused together to create a new culture.

Question 62

Researchers have found that there is a tendency for some organizations to dismiss issues related to organizational culture if the numbers from the merger look good.

Question 63

Some mergers are done without acknowledging the loss of tangible assets such as the knowledge of vacating employees following a merger.

Question 64

Due diligence is a process through which a potential acquirer evaluates a target firm for acquisition

Question 65

When two companies merge,one possible result is the creation of a new compensation system.

Question 66

Individuals who survive a merger often experience stress,anxiety,and loss of productivity.

Question 67

One of the disadvantages of mergers is that employees might have to reapply for their old jobs.

Question 68

Deculturation describes the feeling of inclusion from the dominant partner in a merger even though the organizational cultures may be different.

Question 69

It is estimated that mismanagement of the culture is responsible for as much as 85 percent of all merger failures

Question 70

The success of the valuation-driven acquisition depends on predicting economic cycles.

Question 71

Pension plans are often the root cause of failed merger deals.

Question 72

Mergers and acquisitions can be classified as corporate restructuring strategies.

Question 73

Demotion refers to a reduction of responsibility,territory,or lines of authority for an employee.

Question 74

One main advantage of mergers is the lowering of expenses by reducing headcount.

Question 75

"White knights" refers to a situation in which key players have the right to purchase shares at a huge discount,which makes takeovers extremely expensive.

Question 76

Culture can be likened to the social glue that binds individuals together in an organization.

Question 77

When XM and SIRIUS,two satellite radio businesses in Canada,merged,the impact was negligible on the bottom line for XM.

Question 78

Due diligence is a process through which a potential acquirer evaluates a target firm for acquisition.

Question 79

In their mergers,typically Canadians want more structure and definition of roles and responsibilities than do Mexicans.

Question 80

A takeover usually refers to a hostile transaction because it involves acquisition of the company against the wishes of its management.