Question 1

Which of the following is TRUE regarding M&As?

Accepted Answer

A)  As many as 70 percent of M&As reportedly fail.
B)  On average, the acquiring firms' performance improves after acquisitions.
C)   The outstanding success of M&As is due to pre- and postacquisition phases.
D)   The only identifiable losers are the shareholders of target (acquired)  firms.E) C) and D)
F) A) and B)

Question 2

Product relatedness is determined exclusively by visible product linkages.

Accepted Answer

A) True 
 B)False

Question 3

Research shows that the linkage between product diversification and firm performance seems to be inverted-U shaped.

Accepted Answer

A) True 
 B)False

Question 4

Firms that excel in postacquisition integration tend to possess hard-to-imitate capabilities.

Accepted Answer

A) True 
 B)False

Question 5

Conglomeration tends to provide all of the following EXCEPT:

Accepted Answer

A)  Product-unrelated diversification.
B)  Financial synergy.
C)   Economies of scale.
D)   Economies of scope.E) A) and C)
F) B) and C) C

Question 6

An industry whose products can be easily substituted faces more threats from other firms currently not in the same industry.

Accepted Answer

A) True 
 B)False

Question 7

The economic benefits of the last unit of growth (such as the last acquisition) can be defined as MBC.

Accepted Answer

A) True 
 B)False

Question 8

For firms considering an acquisition, product relatedness is easy to measure.

Accepted Answer

A) True 
 B)False

Question 9

You are managing a firm in a developing economy. What advantages might you have in pursuing conglomeration for your firm?

Accepted Answer

Conglomerates in emerging economies may add value at a higher level of diversification, where firms in developed economies are not able to. This analysis relies on two crucial and reasonable assumptions. The first is that at a given level of diversification, MEB_EmergingEcon > MEB_{DevelopedEcon}. This is primarily because underdeveloped external capital markets in emerging economies make conglomerates as internal capital markets more attractive A second assumption is that at a given level of diversification, MBC_EmergingEcon < MBC_{DevelopedEcon}. In emerging economies, because of the weaknesses of formal institutions, informal constraints rise to play a larger role in regulating economic exchanges. Most conglomerates in these countries are family firms, whose managers rely more on informal personal (and often family) relationships to get things done. Relative to firms in developed economies, firms in emerging economies typically feature a lower level of bureaucratization, formalization, and professionalization, which may result in lower bureaucratic costs. Consequently, for any scope between D₁ and D₂, firms in developed economies need to be downscoped toward D₁, whereas there is still room to gain for firms in emerging economies to move up to D₂.

Question 10

You and your firm need to develop policies that avoid acquisitions and restructuring.

Accepted Answer

A) True 
 B)False

Question 11

Among the industry-based considerations that motivate a firm to diversify is:

Accepted Answer

A)  ​Substantial growth opportunity in an industry.
B)  ​Decreased bargaining power of buyers and suppliers.
C)   ​.Decreased bargaining power of buyers and suppliers.
D)   ​Decreased bargaining power of buyers and suppliersE) C) and D)
F) A) and B)

Question 12

Your manager tells you ​that your firm is considering several acquisitions. The manager asks you for an assessment of which one might be the best for your firm in the immediate future. Without knowing any details about the acquiring or target firms, provide a general checklist of information your manager will need to make a decision.

Accepted Answer

​The generality of this question allows ...

Question 13

Conglomerate M&As are transactions involving firms in product-related industries.

Accepted Answer

A) True 
 B)False

Question 14

Select the best choice: a company that is engaged in oil production, pipelines and tankers, refining, and gasoline stations has engaged in ______________ expansion.

Accepted Answer

A)  Horizontal
B)  Vertical
C)   Hostile M&A
D)   Friendly M&AE) B) and D)
F) B) and C)

Question 15

At its core, diversification is essentially driven by all of the following EXCEPT:

Accepted Answer

A)  Economic benefits.
B)  MEB.
C)   Synergy.
D)   Less complicated information systems.E) A) and B)
F) A) and C)

Question 16

One of the dangers of a centralized structure for a product-unrelated diversified conglomerate is:

Accepted Answer

A)  ​Information overload.
B)  ​Inability to spread out risk.
C)   The opportunity for financial synergy.
D)   ​None of the above.E) A) and B)
F) None of the above

Question 17

Describe how a firm goes from a single product to conglomeration and what the primary issues on that journey might be.

Accepted Answer

​Answers need to make mention of operati...

Question 18

You are the CEO of International Widget and you are contemplating expanding into Lower Slobovia. You have the resources needed to start from scratch in that country but it would be possible to acquire the company that dominates the Lower Slobovian Widget industry. Which do you think would be best: start from scratch or an acquisition?

Accepted Answer

In all of these questions, the important...

Question 19

Sources of operational synergy include:

Accepted Answer

A)  Technologies.
B)  Marketing.
C)   Manufacturing.
D)   All of the above.E) B) and C)
F) A) and C) D

Question 20

To ensure the success of the M&A, managers need to make sure of all the following EXCEPT:

Accepted Answer

A)  Be willing to walk out when premiums are too high.
B)  Engage in adequate due diligence concerning strategic fit.
C)   Seek organizational contrast and variety rather than organizational fit.
D)   Address the concerns of multiple stakeholders.E) All of the above
F) A) and C)

Exam 9: Diversifying, Acquiring, and Restructuring

Which of the following is TRUE regarding M&As?

Correct Answer
verified

Product relatedness is determined exclusively by visible product linkages.

Correct Answer
verified

Research shows that the linkage between product diversification and firm performance seems to be inverted-U shaped.

Correct Answer
verified

Firms that excel in postacquisition integration tend to possess hard-to-imitate capabilities.

Correct Answer
verified

Conglomeration tends to provide all of the following EXCEPT:

Correct Answer
verified
C

An industry whose products can be easily substituted faces more threats from other firms currently not in the same industry.

Correct Answer
verified

The economic benefits of the last unit of growth (such as the last acquisition) can be defined as MBC.

Correct Answer
verified

For firms considering an acquisition, product relatedness is easy to measure.

Correct Answer
verified

You are managing a firm in a developing economy. What advantages might you have in pursuing conglomeration for your firm?

You and your firm need to develop policies that avoid acquisitions and restructuring.

Correct Answer
verified

Among the industry-based considerations that motivate a firm to diversify is:

Correct Answer
verified

Correct Answer
verified
The generality of this question allows ...
View Answer

Conglomerate M&As are transactions involving firms in product-related industries.

Correct Answer
verified

Select the best choice: a company that is engaged in oil production, pipelines and tankers, refining, and gasoline stations has engaged in ______________ expansion.

Correct Answer
verified

At its core, diversification is essentially driven by all of the following EXCEPT:

Correct Answer
verified

One of the dangers of a centralized structure for a product-unrelated diversified conglomerate is:

Correct Answer
verified

Describe how a firm goes from a single product to conglomeration and what the primary issues on that journey might be.

Correct Answer
verified
Answers need to make mention of operati...
View Answer

Correct Answer
verified
In all of these questions, the important...
View Answer

Sources of operational synergy include:

Correct Answer
verified
D

To ensure the success of the M&A, managers need to make sure of all the following EXCEPT:

Correct Answer
verified

Exam 9: Diversifying, Acquiring, and Restructuring

Which of the following is TRUE regarding M&As?

Correct AnswerverifiedShow Answer

Product relatedness is determined exclusively by visible product linkages.

Correct AnswerverifiedShow Answer

Research shows that the linkage between product diversification and firm performance seems to be inverted-U shaped.

Correct AnswerverifiedShow Answer

Firms that excel in postacquisition integration tend to possess hard-to-imitate capabilities.

Correct AnswerverifiedShow Answer

Conglomeration tends to provide all of the following EXCEPT:

Correct AnswerverifiedC

An industry whose products can be easily substituted faces more threats from other firms currently not in the same industry.

Correct AnswerverifiedShow Answer

The economic benefits of the last unit of growth (such as the last acquisition) can be defined as MBC.

Correct AnswerverifiedShow Answer

For firms considering an acquisition, product relatedness is easy to measure.

Correct AnswerverifiedShow Answer

You are managing a firm in a developing economy. What advantages might you have in pursuing conglomeration for your firm?

You and your firm need to develop policies that avoid acquisitions and restructuring.

Correct AnswerverifiedShow Answer

Among the industry-based considerations that motivate a firm to diversify is:

Correct AnswerverifiedShow Answer

Correct Answerverified​The generality of this question allows ...View AnswerShow Answer

Conglomerate M&As are transactions involving firms in product-related industries.

Correct AnswerverifiedShow Answer

Select the best choice: a company that is engaged in oil production, pipelines and tankers, refining, and gasoline stations has engaged in ______________ expansion.

Correct AnswerverifiedShow Answer

At its core, diversification is essentially driven by all of the following EXCEPT:

Correct AnswerverifiedShow Answer

One of the dangers of a centralized structure for a product-unrelated diversified conglomerate is:

Correct AnswerverifiedShow Answer

Describe how a firm goes from a single product to conglomeration and what the primary issues on that journey might be.

Correct Answerverified​Answers need to make mention of operati...View AnswerShow Answer

Correct AnswerverifiedIn all of these questions, the important...View AnswerShow Answer

Sources of operational synergy include:

Correct AnswerverifiedD

To ensure the success of the M&A, managers need to make sure of all the following EXCEPT:

Correct AnswerverifiedShow Answer

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C

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Correct Answer
verified
The generality of this question allows ...
View Answer

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verified

Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified
Answers need to make mention of operati...
View Answer

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In all of these questions, the important...
View Answer

Correct Answer
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D

Correct Answer
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