MAN 4720 Ch 7 Cengage Quiz Questions
With Verified Answers
The need to create _____ for stakeholders is a primary influence on a firm's
decisions to engage in merger and acquisition activity.
a. shares
b. growth
c. profitability
d. value - ANSWER d. value
An influence that impacts a firm's decision to pursue a merger or acquisition is
increased confidence in its:
a. domestic market.
b. global market.
c. domestic economy.
d. growth opportunities. - ANSWER c. 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):
a. strategic alliance.
b. joint venture.
c. merger.
d. acquisition. - ANSWER c. merger.
Which of the following statements best explains how shareholders are affected
by acquisitions?
a. Acquired firms' shareholders often earn below-average returns as a result of
acquisitions, whereas acquiring firms' shareholders often earn above-average
returns as a result of acquisitions.
b. Both acquired and acquiring firms' shareholders often earn above-average
returns as a result of acquisitions.
c. 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.
d. Acquired firms' shareholders often earn above-average returns as a result of
acquisitions, whereas acquiring firms' shareholders often earn below-average
returns as a result of acquisitions. - ANSWER c. 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:
a. decreased market power.
b. higher profitability.
c. resources.
d. increased market power. - ANSWER d. 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:
a. a merger.
b. vertical integration.
c. a vertical acquisition.
d. a horizontal acquisition. - ANSWER d. a 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?
a. Related acquisition
b. Unrelated acquisition
c. Vertical acquisition
d. Cross-border acquisition - ANSWER a. 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?
a. Market power
b. Developing new capabilities
c. Diversification
d. Decreasing debt - ANSWER a. Market power
Which of the following is an example of a problem that can prevent an
acquisition from being successful?
a. Adequate evaluation of target
b. Little to no debt
c. Ability to achieve synergy
d. Too much diversification - ANSWER d. Too much diversification
What does it mean when an acquisition is unable to achieve synergy?
a. When a firm becomes so large it does not have the economics necessary to
manage the complexity of the organization made by the acquisition
With Verified Answers
The need to create _____ for stakeholders is a primary influence on a firm's
decisions to engage in merger and acquisition activity.
a. shares
b. growth
c. profitability
d. value - ANSWER d. value
An influence that impacts a firm's decision to pursue a merger or acquisition is
increased confidence in its:
a. domestic market.
b. global market.
c. domestic economy.
d. growth opportunities. - ANSWER c. 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):
a. strategic alliance.
b. joint venture.
c. merger.
d. acquisition. - ANSWER c. merger.
Which of the following statements best explains how shareholders are affected
by acquisitions?
a. Acquired firms' shareholders often earn below-average returns as a result of
acquisitions, whereas acquiring firms' shareholders often earn above-average
returns as a result of acquisitions.
b. Both acquired and acquiring firms' shareholders often earn above-average
returns as a result of acquisitions.
c. 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.
d. Acquired firms' shareholders often earn above-average returns as a result of
acquisitions, whereas acquiring firms' shareholders often earn below-average
returns as a result of acquisitions. - ANSWER c. 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:
a. decreased market power.
b. higher profitability.
c. resources.
d. increased market power. - ANSWER d. 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:
a. a merger.
b. vertical integration.
c. a vertical acquisition.
d. a horizontal acquisition. - ANSWER d. a 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?
a. Related acquisition
b. Unrelated acquisition
c. Vertical acquisition
d. Cross-border acquisition - ANSWER a. 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?
a. Market power
b. Developing new capabilities
c. Diversification
d. Decreasing debt - ANSWER a. Market power
Which of the following is an example of a problem that can prevent an
acquisition from being successful?
a. Adequate evaluation of target
b. Little to no debt
c. Ability to achieve synergy
d. Too much diversification - ANSWER d. Too much diversification
What does it mean when an acquisition is unable to achieve synergy?
a. When a firm becomes so large it does not have the economics necessary to
manage the complexity of the organization made by the acquisition
