Diversifying and Managing Acquisitions Globally Quiz-9

Cross-border M&As:

• make up a small percent of the total number of M&As.

• have increased in the past 20 years.

• tend to be vertical rather than horizontal.

• are primarily conglomerate deals.

Which of the following is TRUE regarding restructuring?

• The two primary ways of restructuring are downsizing and upsizing.

• Restructuring (downsizing) is used more often by acquiring firms than by seller firms.

• Corporate restructuring is the primary tool for reducing firm size and scope.

• Restructuring is easier in knowledge-intensive firms than capital-intensive firms.

Among the following synergistic motives for M&As, which is a resource-based consideration?

• Learning and developing new skills

• Overcoming entry barriers

• Responding to formal institutional constraints

• Reducing risk

When a firm experiences a failure to integrate its M&As after the acquisition, it is most likely the result of:

• an inadequate number of worthy targets.

• poor strategic fit.

• far-flung conglomerates.

• poor organizational fit.

Which of the following statements is TRUE?

• Diversification creates value in virtually all circumstances.

• Diversification can create value by leveraging certain core competencies and capabilities.

• Compared with diversified firms, non-diversified single-business firms are better able to spread risk.

• Firms that undertake acquisitions have mastered the art of post-acquisition integration.

As an organization becomes larger and more complex, adding more employees and using more complicated information systems, what should it expect to happen?

• Economies of scale will be achieved.

• Economies of scope will be achieved.

• Bureaucratic costs will go down.

• Bureaucratic costs will go up.

A company that is engaged in oil production, pipelines and tankers, refining, and gasoline stations has engaged in what type of M&As?

• Horizontal

• Vertical

• Conglomerate

• Cross-border

Research regarding the relationship between product diversification and firm performance indicates that:

• putting your eggs in similar baskets has emerged as a balanced way to both reduce risk and leverage synergy.

• performance may increase as firms change from product-related to product-unrelated diversification.

• the linkage between diversification and performance is U shaped.

• putting all eggs in one basket poses the least amount of risk.

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

• power of suppliers and buyers.

• value as measured by risk reduction.

• informal norms and cognitions.

• core competencies.

Which of the following is true of product relatedness?

• There are agreed-upon methods of measurement of product relatedness.

• A product-related firm will be considered related regardless of the measure used.

• Product-unrelated conglomerates are not linked by institutional relatedness.

• Relatedness is not limited to visible product linkages.