Exam # 3 MAN4720
Raymond Vernon states that the classic rationale for international diversification is to: a. pre-emptively dominate world markets before foreign companies can establish dominance. b. avoid domestic governmental regulation. c. extend the product's life cycle. d. avoid international governmental regulation.
c. extend the product's life cycle.
A friendly acquisition: a. raises the price that has to be paid for a firm. b. enhances the complementarity of the two firms' assets. c. facilitates the integration of the acquired and acquiring firms. d. allows joint ventures to be developed.
c. facilitates the integration of the acquired and acquiring firms.
Private synergy: a. occurs in most related acquisitions and allows firms to see increased returns. b. is frequently achieved in conglomerates. c. is not easy for competitors to understand and imitate. d. is assessed by managers during the due diligence process.
c. is not easy for competitors to understand and imitate.
Caterpillar's payment of a 32 percent premium for the acquisition of Bucyrus in 2011 and subsequent need to issue more stock illustrates the acquisition problem of: a. integration difficulties. b. inability to achieve synergy. c. large or extraordinary debt. d. managers overly focused on acquisitions.
c. large or extraordinary debt.
Working in multiple international markets can provide firms with __________ perhaps even in terms of __________. a. location advantages; larger markets b. research and development activities; larger markets c. new learning opportunities; research and development activities d. economies of scale and learning; larger markets
c. new learning opportunities; research and development activities
There are few true mergers because: a. few firms have complementary resources. b. integration problems are more severe than in outright acquisitions. c. one firm usually dominates in terms of market share, size, or value of assets. d. of managerial resistance. True mergers result in significant managerial-level layoffs.
c. one firm usually dominates in terms of market share, size, or value of assets.
The ____ phase is probably the single most important determinant of shareholder value creation in mergers and acquisitions. a. pre-acquisition negotiations b. pre-acquisition due diligence c. post-acquisition integration d. post-acquisition restructuring
c. post-acquisition integration
Magma, Inc., acquired Vulcan, Inc., 3 years ago. Effective integration of the two companies' culture was never achieved, and the two firms' assets were not complementary. It is very likely that Magma will: a. go public through an IPO. b. review the due diligence information collected before the acquisition. c. restructure. d. review its tactical-level strategies.
c. restructure.
When the target firm does not solicit the acquiring firm's bid, it is referred to as a(n): a. stealth raid. b. adversarial acquisition. c. takeover or unfriendly acquisition. d. leveraged buyout.
c. takeover or unfriendly acquisition.
Due diligence includes all of the following activities EXCEPT assessing: a. differences in firm cultures. b. tax consequences of the acquisition. c. the level of private synergy between the two firms. d. financing for intended transaction.
c. the level of private synergy between the two firms.
All of the following statements are correct EXCEPT: a. immediately after the announcement of a planned acquisition, the stock price of the majority of acquiring firms declines. b. shareholders of acquired firms often earn above-average returns from an acquisition. c. the majority of acquisitions increase long-term value for the acquiring firm. d. shareholders of acquiring firms typically earn returns from the transaction that are close to zero.
c. the majority of acquisitions increase long-term value for the acquiring firm.
The expenses incurred by firms trying to create synergy through acquisition are called ____ costs. a. differentiation b. diversification c. transaction d. interaction
c. transaction
Baby Doe's, a designer and manufacturer of children's clothing, has decided to purchase a retail chain specializing in children's clothing. This purchase is a(n): a. merger. b. unrelated acquisition. c. horizontal acquisition. d. vertical acquisition.
d. vertical acquisition.
Manny Inc. recently completed the purchase of its primary supplier. Manny intends to begin expanding the market to which the suppliers' products are sold. This purchase is a(n): a. merger. b. unrelated acquisition. c. horizontal acquisition. d. vertical acquisition.
d. vertical acquisition.
When a firm acquires its supplier, it is engaging in a(n): a. merger. b. unrelated acquisition. c. hostile takeover. d. vertical acquisition.
d. vertical acquisition.
The use of high levels of debt in acquisitions has contributed to: a. the increase in above-average returns earned by acquiring firms. b. an increased risk of bankruptcy for acquiring firms. c. the confidence of the stock market in firms issuing junk bonds. d. an increase in investments that have long-term payoffs.
b. an increased risk of bankruptcy for acquiring firms.
Moving into international markets is a particularly attractive strategy to firms whose domestic markets: a. demand a differentiation strategy for success. b. are limited in opportunities for growth. c. have developed unfriendly business attitudes toward the industry. d. have too much regulation.
b. are limited in opportunities for growth.
Research shows that about ____ percent of mergers and acquisitions are successful. a. 20 b. 40 c. 60 d. 80
a. 20
Which of the following is NOT one of the three main restructuring strategies? a. Realigning b. Downsizing c. Downscoping d. Leveraged buyouts
a. Realigning
Firms with core competencies that can be exploited across international markets are able to: a. achieve synergies and produce high-quality goods at lower costs. b. enter new markets more quickly. c. enhance their market image and brand loyalty among local consumers. d. meet local government requirements more quickly than their international competitors.
a. achieve synergies and produce high-quality goods at lower costs.
Without effective due diligence the: a. acquiring firm is likely to overpay for an acquisition. b. firm may miss its opportunity to buy a well-matched company. c. acquisition may deteriorate into a hostile takeover, reducing the value creating potential of the action. d. firm may be unable to act quickly and decisively in purchasing the target firm.
a. acquiring firm is likely to overpay for an acquisition.
Horizontal, vertical, and related acquisitions to build market power: a. are likely to undergo regulatory review and analysis by financial markets. b. are rarely permitted to occur across international borders. c. typically involve a firm purchasing one of its suppliers or distributors. d. concentrate on capturing value at more than one stage in the value chain.
a. are likely to undergo regulatory review and analysis by financial markets.
Thomas is an upper-middle level manager for a firm that has been actively involved in acquisitions over the last 10 years. The firm has grown much larger as a result. Thomas has been dismayed to find that recently the managerial culture of the firm has been turning more and more to ____ controls. a. bureaucratic b. strategic c. tactical d. organic
a. bureaucratic
Internal product development is often viewed as: a. carrying a high risk of failure. b. the only reliable method of generating new products for the firm. c. a quicker method of product launch than acquisition of another firm. d. critical to the success of biotech and pharmaceutical firms.
a. carrying a high risk of failure.
Failing to ____________ appropriately will result in too many employees doing the same work and prevent the new firm from realizing the cost synergies it anticipated. a. downsize b. spin-off c. downscope d. buyout
a. downsize
Researchers have found that shareholders of acquired firms often: a. earn above-average returns. b. earn below-average returns. c. earn close to zero as a result of the acquisition. d. are not affected by the acquisition.
a. earn above-average returns.
Firms able to standardize the processes used to produce, sell, distribute, and service their products across country borders enhance their ability to: a. learn how to continuously reduce costs while increase the value of their products. b. increase investment in research and development. c. access to a low-cost labor force in the host market. d. mitigate cultural differences.
a. learn how to continuously reduce costs while increase the value of their products.
U.S. cola companies entered the global market because of: a. limited growth opportunities in their domestic market. b. lower labor costs in the emerging markets. c. economies of scale that offset research and development costs. d. an increase in the return on investment from their U.S. bottling plants.
a. limited growth opportunities in their domestic market.
Research has shown that the more ____, the greater is the probability that an acquisition will be successful. a. related the acquired and acquiring firms are b. diverse the resulting portfolio of competencies c. disparate the corporate cultures d. involved investment banking firms are in the due diligence
a. related the acquired and acquiring firms are
Typically, in a failed acquisition, the organization will: a. restructure. b. go into bankruptcy. c. focus on building private synergy. d. increase integration.
a. restructure.
After a leveraged buyout, ____ typically occur(s). a. selling of assets b. further rounds of acquisitions c. due diligence d. private synergy
a. selling of assets
A manager in your company is proposing the acquisition of Taylor Company, which has developed a new, innovative product instead of a strategy of developing new products in-house. All of the following arguments are correct EXCEPT: *a. the acquisition of Taylor should be primarily for defensive rather than strategic reasons. b. research suggests that acquisition strategies are a common means of avoiding risky internal ventures. c. the outcomes of acquisitions can be estimated more easily and accurately than the outcomes for an internal product development process. d. acquisitions could become a substitute for innovation within your firm.
a. the acquisition of Taylor should be primarily for defensive rather than strategic reasons.
Sales of watches among teenagers and twenty-somethings are declining rapidly as this age group uses cellphones, iPods, and other devices to tell time. A company that specializes in selling inexpensive watches to this age group may wish to consider ____ in order to develop new products other than watches. a. unrelated diversification b. backward integration c. forward integration d. horizontal acquisitions
a. unrelated diversification
The acquisition of Sun Microsystems (a computer hardware producer) by Oracle Corporation (a software firm) is an example of a(n): a. vertical acquisition. b. unrelated acquisition. c. horizontal acquisition. d. merger of equals.
a. vertical acquisition.
The factors that lead to poor long-term performance by acquisitions include all of the following EXCEPT firms: a. with insufficient diversification. b. having too much debt. c. being unable to achieve synergy. d. growing too large.
a. with insufficient diversification.
Which of the following is NOT a result of over-diversification? a. Executives do not have a rich understanding of all of the firm's business units. b. Managers emphasize strategic controls rather than financial controls. c. Firms use acquisition as a substitute for innovation. d. Managers become short-term in their orientation.
b. Managers emphasize strategic controls rather than financial controls.
A primary reason for a firm to pursue an acquisition is to: a. avoid increased government regulation. b. achieve greater market power. c. exit a hyper-competitive market. d. achieve greater financial returns in the short run.
b. achieve greater market power.
A(n) ____ occurs when one firm buys a controlling, or 100 percent interest, in another firm. a. merger b. acquisition c. spin-off d. restructuring
b. acquisition
SpeakEasy, a U.S. software company that specializes in voice-recognition software, wishes to rapidly enter the growing technical translation software market. This market is dominated by firms making highly differentiated products. To enter this market, SpeakEasy would be best served if it considers a(an): a. vertical acquisition of a firm that uses technical translation products. b. acquisition of a highly related firm in the technical translation market. c. cross-border merger, preferably with an Indian or Chinese company. d. strategy of internally developing the technical translation products needed to compete in this market.
b. acquisition of a highly related firm in the technical translation market.
The term "leverage" in leveraged buyouts refers to the: a. firm's increased concentration on the firm's core competencies. b. amount of new debt incurred in buying the firm. c. fact that the employees are purchasing the firm for which they work. d. process of removing the firm's stock from public trading.
b. amount of new debt incurred in buying the firm.
When a firm is overly dependent on one or more products or markets, and the intensity of rivalry in that market is intense, the firm may wish to ____ by making an acquisition. a. increase new product speed to market b. broaden its competitive scope c. increase its economies of scale d. overcome entry barriers
b. broaden its competitive scope
Japan, due to a lack of undeveloped land, would be an unusual choice of location for a U.S. cattle company to set up local grazing operations. This limiting factor would be identified in what part of Porter's determinants of national advantage? a. Factors of production b. Demand conditions c. Related and supporting industries d. Firm strategy, structure, and rivalry
*a. Factors of production
A global corporate-level strategy differs from a multi-domestic corporate-level strategy in that in a global strategy: a. competitive strategy is dictated by the home office. b. competitive strategy is decentralized and controlled by individual strategic business units. c. products are customized to meet the individual needs of each country. d. the firm sells in multiple countries.
*a. competitive strategy is dictated by the home office.
During the recent financial crisis, M&A activity ______, whereas in 2011, M&A activity a. declined; increased b. declined; declined c. increased; increased d. increased; declined
*a. declined; increased
A fundamental reason for a country's development of advanced and specialized factors of production is often its: a. lack of basic resources. b. monetary wealth. c. small workforce. d. protective tariffs.
*a. lack of basic resources.
International corporate-level strategy focuses on: a. the scope of operations through both product and geographic diversification. b. competition within each country. c. economies of scale. d. sophistication of monitoring and controlling systems.
*a. the scope of operations through both product and geographic diversification.
A large domestic market can provide the country's industries a chance at dominating the world market because: a. they have been able to develop economies of scale at home. b. they have access to abundant and inexpensive factors of production. c. the related and supporting industries will have been developed. d. the nation's culture and educational system will be adapted to producing the labor force needed for the industry.
*a. they have been able to develop economies of scale at home.
In China, Starbucks is standardizing its operations while simultaneously decentralizing some decision-making responsibility to local levels to meet customers' tastes. Starbucks is following the __________ international corporate-level strategy. a. transnational b. global c. differentiation d. multi-domestic
*a. transnational
Compared with downsizing, ____ has (have) a more positive effect on firm performance. a. reconfiguring b. downscoping c. leveraged buyouts d. acquisitions
*b. downscoping
A global corporate-level strategy emphasizes: a. differentiated products. b. economies of scale. c. sensitivity to local product preferences. d. decentralizing control and limited monitoring.
*b. economies of scale.
A multi-domestic corporate-level strategy has ____ need for global integration and ____ need for local market responsiveness. a. low; low b. low; high c. high; low d. high; high
*b. low; high
In France, fine dressmaking and tailoring have been a tradition predating Queen Marie Antoinette. Cloth manufacturers, design schools, craft apprenticeship programs, modeling agencies, and so forth, all exist to supply the clothing industry. This is an example of the ____ in Porter's model. a. strategy, structure, and rivalry among firms b. related and supporting industries c. demand conditions d. factors of production
*b. related and supporting industries
Increasingly, customers worldwide are demanding emphasis on local requirements and companies require efficiency as global competition increases. This has triggered an increase in the number of firms using the ____ strategy. a. multi-domestic b. transnational c. universal d. global
*b. transnational
All of the following are international corporate-level strategies EXCEPT the ____ strategy. a. multi-domestic b. universal c. global d. transnational
*b. universal
A leveraged buyout refers to: a. a firm restructuring itself by selling off unrelated units of the company's portfolio. b. a firm pursuing its core competencies by seeking to build a top management team that comes from a similar background. c. a restructuring action whereby a party buys all of the assets of a business, financed largely with debt, and takes the firm private. d. an action where the management of the firm and/or an external party buys all of the assets of a business financed largely with equity.
*c. a restructuring action whereby a party buys all of the assets of a business, financed largely with debt, and takes the firm private.
A leveraged buyout refers to: a. a firm restructuring itself by selling off unrelated units of the company's portfolio. b. a firrem pursuing its core competencies by seeking to build a top management team that comes from a similar background. c. a restructuring action whereby a party buys all of the assets of a business, financed largely with debt, and takes the firm private. d. an action whe the management of the firm and/or an external party buys all of the assets of a business financed largely with equity.
*c. a restructuring action whereby a party buys all of the assets of a business, financed largely with debt, and takes the firm private.
In addition to the four basic dimensions of Porter's "diamond" model, ____ may also contribute to the success or failure of firms. a. national work ethic b. educational requirements c. government policy d. national pride
*c. government policy
The four aspects of Porter's model of international competitive advantage include all of the following EXCEPT: a. factors of production. b. demand conditions. c. political and economic institutions. d. related and supporting industries.
*c. political and economic institutions.
All of the following are correct about what managers should know about firms based in a country with a national competitive advantage EXCEPT: a. success is not guaranteed as the firm implements its chosen international business-level strategy. b. the actual strategic choices made are most compelling reasons for success or failure. c. success is guaranteed as the firm implements its chosen international business-level strategy. d. the determinants of national competitive advantage provide a foundation for a firm's competitive advantages.
*c. success is guaranteed as the firm implements its chosen international business-level strategy.
A multi-domestic corporate-level strategy is one in which: a. a corporation chooses not to compete internationally but where there are a number of international competitors in the firm's local marketplace. b. the firm produces a standardized product, but markets it differently in each country in which it competes. c. the firm customizes the product for each country in which it competes. d. the firm competes in a number of countries, but it is centrally coordinated by the home office.
*c. the firm customizes the product for each country in which it competes.
Which pair of industries would NOT be considered as "related and supporting" under Porter's diamond model? a. Japanese cameras and copiers b. Italian leather-processing and shoes c. U.S. computers and software d. highway systems and the supply of debt capital
*d. highway systems and the supply of debt capital
The transnational strategy is becoming increasingly necessary to compete in international markets for all the following reasons EXCEPT: a. the growing number of competitors heightens the requirements to keep costs down. b. the desire for specialized products to meet consumers' needs. c. differences in culture and institutional environments also require firms to adapt their products and approaches to local environments. d. it is easy to use.
*d. it is easy to use.
A global strategy: a. is easy to manage because of common operating decisions across borders. b. achieves efficient operations without sharing resources across country boundaries. c. increases risk because decision making is centralized at the home office. d. lacks responsiveness to local markets.
*d. lacks responsiveness to local markets.
A global corporate-level strategy assumes: a. efficiency and customization can be achieved simultaneously. b. a rise in income levels across the world. c. increasing levels of cultural differences among nations. d. more standardization of products across country markets.
*d. more standardization of products across country markets.
Effectively implementing the ________ international corporate-level strategy often produces higher performance than does implementing either the _______ or _________ strategies. a. multi-domestic; global; transnational b. global; multi-domestic; transnational c. cost leadership; differentation; focus d. transnational; multi-domestic; global
*d. transnational; multi-domestic; global
An investor is analyzing two firms in the same industry. She is looking for long-term performance from her investment. Both firms are basically identical except one firm is involved in substantial downsizing and the other firm is undertaking aggressive downscoping. The investor should invest in the: a. downscoping firm because the higher debt load will discipline managers to act in shareholders' best interests. b. downscoping firm because of reduced debt costs and the emphasis on strategic controls derived from focusing on the firm's core businesses. c. downsizing firm because it will be making decisions based on tactical strategies. d. downsizing firm because it is eliminating employees who are essentially "dead weight" and are dragging down the firm's profitability.
b. downscoping firm because of reduced debt costs and the emphasis on strategic controls derived from focusing on the firm's core businesses.
The increased pressures for global integration of operations have been driven mostly by: a. new low-cost entrants. b. increasing demand for similar products. c. increased levels of joint ventures. d. the rise of governmental regulation.
b. increasing demand for similar products.
Entering new markets through acquisitions of companies with new products is not risk-free, especially if acquisition becomes a substitute for: a. market discipline. b. innovation. c. risk analysis. d. international diversification.
b. innovation.
The fastest and easiest way for a firm to diversity its portfolio of businesses is through acquisition because: a. of barriers to entry in many industries. b. it is difficult and time intensive for companies to develop products that differ from their current product line. c. innovation in both the acquired and the acquiring firm is enhanced by the exchange of competencies resulting from acquisition. d. unrelated acquisitions are usually uncomplicated because the acquired firm is allowed to continue to function independently as it did before acquisition.
b. it is difficult and time intensive for companies to develop products that differ from their current product line.
Compared to internal product development, acquisitions allow: a. immediate access to innovations in mature product markets. b. more accurate prediction of return on investment. c. slower market entry. d. more effective use of company core competencies.
b. more accurate prediction of return on investment.
The presence of barriers to entry in a particular market will generally make acquisitions ____ as an entry strategy. a. less likely b. more likely c. prohibitive d. illegal
b. more likely
Market power is derived primarily from the: a. core competencies of the firm. b. size of a firm and its resources and capabilities. c. quality of a firm's top management team. d. depth of a firm's strategy.
b. size of a firm and its resources and capabilities.
Claude holds a large number of shares of Bayou Beauty, a regional brewing company that is considered a likely takeover target by a major international brewer. It would probably be in Claude's financial interest if Bayou Beauty's owners: a. resisted selling at any price. b. sold the company to the larger brewer. c. designed a poison pill to discourage a takeover. d. looked for smaller brewers to acquire instead of selling to the larger brewer.
b. sold the company to the larger brewer.
International strategy refers to a(n): a. action plan pursued by American companies to compete against foreign companies operating in the United States. b. strategy through which the firm sells products in markets outside the firm's domestic market. c. political and economic action plan developed by businesses and governments to cope with global competition. d. strategy American firms use to dominate international markets
b. strategy through which the firm sells products in markets outside the firm's domestic market.
Currently, the rationale for making an acquisition includes each of the following EXCEPT: a. to increase market power. b. to decrease taxes paid by shareholders. c. to overcome entry barriers. d. to increase diversification.
b. to decrease taxes paid by shareholders.
In a merger: a. one firm buys controlling interest in another firm. b. two firms agree to integrate their operations on a relatively coequal basis. c. two firms combine to create a third separate entity. d. one firm breaks into two firms.
b. two firms agree to integrate their operations on a relatively coequal basis.
Managers perceive internal product development as a high-risk activity and tend to choose acquisitions because approximately _______ percent of innovations are imitated within 4 years after patents are obtained. a. 5 b. 10 c. 60 d. 20
c. 60
____ typically result(s) in the acquiring firm being able to prevent valuable human resources in the acquired firm from leaving. a. Financial slack b. Private synergy c. Friendly acquisitions d. High compensation
c. Friendly acquisitions
Which of the following statements is FALSE? a. Synergy resulting from an acquisition generates gains in shareholder wealth beyond what they could achieve through diversification of their own portfolios. b. Private synergy results when the combination of two firms yields competencies and capabilities that could not be achieved by combining with any other firm. c. Private synergy is easy for competitors to understand and imitate. d. Private synergy is more likely when the two firms in an acquisition have complementary assets.
c. Private synergy is easy for competitors to understand and imitate.
Which of the following is NOT an incentive for firms to become multinational? a. To gain access to consumers in emerging markets b. To gain easier access to raw materials c. To avoid high domestic taxation on corporate income d. Opportunities to integrate operations on a global scale
c. To avoid high domestic taxation on corporate income
U.S. companies moving into the international market need to be sensitive to the need for local country or regional responsiveness because of: a. increasing rejection of American culture across much of the world. b. the sophistication of the international consumer because of the Internet. c. consumer needs, political and legal structures, and social norms vary by country. d. the increasing loss of economies of scale.
c. consumer needs, political and legal structures, and social norms vary by country.
Ambrose is a scientist working for a pharmaceutical company. His company was acquired by a rival pharmaceutical company, and now it is involved in downsizing and downscoping. Ambrose is concerned about his job security, since he is actively involved in amateur sports in his community and does not wish to disrupt his current lifestyle. Ambrose's job will be most likely to be secure if: a. Ambrose's research is in a non-core activity. b. the acquisition has been financed by junk bonds. c. Ambrose is in a position to take a poison pill. d. Ambrose is a key employee in the firm's primary business.
d. Ambrose is a key employee in the firm's primary business.
Which of the following is NOT a factor pressuring companies for local responsiveness? a. Differences in employment laws b. Customization due to cultural differences c. Government pressure for firms to use local sources for procurement d. Availability of low labor costs
d. Availability of low labor costs
_________ refers to a divestiture, spin-off, or some other means of eliminating businesses that are unrelated to a firm's core business. a. Downsizing b. Hostile takeovers c. Shakeouts d. Downscoping
d. Downscoping
___________ is often used when the acquiring firm paid too high a premium to acquire the target firm. a. Management buyout b. Leveraged buyout c. Downscoping d. Downsizing
d. Downsizing
Which of the following is NOT an attribute of a successful acquisition? a. The acquiring firm has a large amount of financial slack. b. The acquired and acquiring firms have complementary assets and/or resources. c. Innovation and R&D investments continue as part of the firm's strategy. d. Investments in advertising and image building are made quickly.
d. Investments in advertising and image building are made quickly.
____ are unsecured obligations that are not tied to specific assets for collateral. a. Bearer bonds b. No-load stocks c. Penny stocks d. Junk bonds
d. Junk bonds
Pappelbon Enterprises recently acquired a chain of convenience stores offering both fuel and food. Pappelbon is now surprised and dismayed to find that the gas pumps have been poorly maintained and will need to be replaced at considerable expense. Each of the following statements accurately reflect this EXCEPT: a. Pappelbon did not fully evaluate the target. b. Pappelbon overpaid. c. Pappelbon's due diligence was not fully effective. d. Pappelbon's management was overly focused on acquisitions.
d. Pappelbon's management was overly focused on acquisitions.
In Porter's model, if a country has both ________ and __________ production factors, it is likely to serve an industry well by spawning strong home-country competitors that can also be successful global competitors. a. basic; advanced b. advanced; generalized c. basic; generalized d. advanced; specialized
d. advanced; specialized
The location advantages associated with locating facilities in other countries can include all of the following EXCEPT: a. low-cost labor. b. access to critical supplies. c. access to customers. d. evasion of host country governmental regulations.
d. evasion of host country governmental regulations.
Problems associated with acquisitions include all of the following EXCEPT: a. managers overly focused on acquisitions. b. integration difficulties. c. large or extraordinary debt. d. excessive time spent on the due diligence process.
d. excessive time spent on the due diligence process.
The benefits of expanding into international markets include each of the following opportunities EXCEPT: a. increasing the size of the firm's potential markets. b. economies of scale and learning. c. location advantages. d. favorable tax concessions and economic incentives by home-country governments.
d. favorable tax concessions and economic incentives by home-country governments.
Cross-border acquisitions are critical to U.S. firms competing internationally: a. if they are to develop differentiated products for markets served. b. when market share growth is the focus. c. where consolidated operations are beneficial. d. if they wish to overcome entry barriers to international markets.
d. if they wish to overcome entry barriers to international markets.
Whole-firm LBOs tend to result in all the following negative outcomes EXCEPT: a. large debt and increased financial risk. b. failure to invest in R&D. c. risk-averse management. d. inefficient operations.
d. inefficient operations.
Acquisitions can become a time sink for top level managers for all the following reasons EXCEPT: a. the integration process after acquisition requires managerial attention. b. they must prepare for acquisition negotiations. c. managers are involved in the search for viable acquisition candidates. d. only top managers can perform the required due diligence.
d. only top managers can perform the required due diligence.
Cross-border acquisitions are primarily made to: a. reshape the firm's competitive scope. b. reduce the cost of new product development. c. take advantage of higher education levels of labor in developed countries. d. overcome barriers to entry in another country.
d. overcome barriers to entry in another country.
Each of the following is a rationale for acquisitions EXCEPT: a. achieving greater market power. b. overcoming significant barriers to entry. c. increasing speed of market entry. d. positioning the firm for a tactical competitive move.
d. positioning the firm for a tactical competitive move.
The announcement that P&G was acquiring premium dog and cat food manufacturer Iams was a _________ acquisition and is intended to ________. a. vertical; increase diversification b. horizontal; increase market power c. vertical; overcome entry barriers d. related; increase speed to market
d. related; increase speed to market
Factors of production in Porter's model of international competitive advantage include all of the following EXCEPT: a. labor. b. capital. c. infrastructure. d. technology.
d. technology.
One problem with becoming too large is that large firms: a. tend to have less market power. b. have less potential for economies of scale. c. become attractive takeover targets. d. usually increase bureaucratic controls.
d. usually increase bureaucratic controls.