WPC 480 Chapter 7 Exam Questions And Answers 100% Solved 2024/2025
merger
is a strategy through which two firms
agree to integrate their operations on a relatively
coequal basis
acquisition
is a strategy through which one
firm buys a controlling, or 100 percent, interest
in another firm...
WPC 480 Chapter 7 Exam Questions And
Answers 100% Solved 2024/2025
merger
is a strategy through which two firms
agree to integrate their operations on a relatively
coequal basis
acquisition
is a strategy through which one
firm buys a controlling, or 100 percent, interest
in another firm with the intent of making the
acquired firm a subsidiary business within its
portfolio.
Restructuring
is a strategy through which a
firm changes its set of businesses or its financial
structure.
takeover
Is a special type of acquisition
where the target firm does not solicit the
acquiring firm's bid; thus, takeovers are
unfriendly acquisitions.
The need to create _____ for stakeholders is a primary influence on a firm's decisions to engage in
merger and acquisition activity.
value
An influence that impacts a firm's decision to pursue a merger or acquisition is increased confidence
in its:
domestic economy.
Disney bought Pixar in 2004 to extend and begin a new partnership in its renewed focus on
animation. In the deal, Steve Jobs, the CEO of Pixar at the time, vowed to preserve the independent
nature of Pixar. Since then, the two have put out hits such as Wall-E and Up. This partnership is an
example of a(n):
merger.
Which of the following statements best explains how shareholders are affected by acquisitions?
Acquired firms' shareholders often earn above-average returns as a result of acquisitions, whereas
acquiring firms' shareholders often earn returns that are close to zero as a result of acquisitions.
When a firm buys a competitor, supplier, distributor, or business in a highly-related industry so a core
competency can be used to gain competitive advantage, this demonstrates an acquisition strategy to
gain:
increased market power.
, When a firm acquires another firm competing in the same industry, market power is increased by
exploiting cost and revenue-based synergies. This type of acquisition is called:
horizontal acquisition.
A popular juniors clothing store features young designers and has been very successful. To gain
strategic competitiveness, the clothing store frequently acquires young social-media sensations'
designs and brings their designs to life in the store. What type of acquisition is the store using to
increase its strategic competitiveness?
Related acquisition
Two specialty craft stores have just been bought by craft giant Ultimate Crafts. By rebranding the
small stores, Ultimate Crafts' executives hope to gain strategic competitiveness in what way?
Market power
Which of the following is an example of a problem that can prevent an acquisition from being
successful?
Too much diversification
What does it mean when an acquisition is unable to achieve synergy?
When the acquiring firm and acquired firm do not effectively share resources, economies of scale, and
economies of scope across the businesses
Which of the following is a component of an acquisition that managers can become overly focused
on?
Searching for viable acquisition candidates
Which of the following statements does NOT describe a challenge associated with the integration
process of an acquisition?
Meld two or more similar businesses' cultures
A large software company is in the process of acquiring a small tech startup that has built an app for
developers to code websites on their smartphones. It is rumored that the software company has
grossly overestimated the future growth as a result of the acquisition. If this turns out to be true,
what common acquisition problem has the software company encountered?
Inadequate evaluation of target
A large car manufacturer has acquired its tire supplier through a vertical acquisition. Unfortunately,
instead of realizing economy of scale by adding to its value chain, the manufacturer has had very
small return on its investment. The firm is struggling to prioritize its efforts between manufacturing
and acting as a tire supplier for outside businesses. With so much production power and so little use
of it, the manufacturer's operations have become ineffective. What common problem of acquisitions
has the manufacturer encountered?
Too large
Although French-based Cap Gemini SA performed an extensive due-diligence process prior to
acquiring U.S.-based iGate Corp, analysts worry about the integration process following the
acquisition. What is a difference between the two that might cause difficult integration?
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