WorksheetsDiversifying and Managing Acquisitions Globally Quiz-9
Total questions: 16
Worksheet time: 20mins
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.
Which of the following is a motive for M&As that may actual reduce shareholder value?
Synergy
Hubris
Performance
Marginal economic benefits
One of the dangers of a centralized structure for a product-unrelated diversified conglomerate is:
information overload.
inability to spread out risk.
lack of financial synergy.
too much centralization.
Firm A, which is a gas and oil company, acquires a chemical company, a transportation company, and a financial services company. What type of M&As does this exemplify?
Horizontal
Vertical
Conglomerate
Hostile
The manager of Firm X watches the manager of a competing firm (Firm Y) successfully pursue some vertical integration up the supply chain. Firm A’s manager immediately begins acquiring companies in its supply chain. At first glance, the manager’s motives appear to be:
synergistic.
risk reduction.
hubristic.
self-interest.
Diversification is beneficial for all of the following situations EXCEPT which one?
Risk is spread over several (product or country) markets.
Core resources are leveraged.
The art of post-acquisition integration has been mastered.
Commonly shared industry skills are used.
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.
