Question 1

What is perhaps the most important reason why acquisitions fail?
A)The expense of the acquisition
B)The timing of the acquisition
C)Management's unwillingness to make the necessary effort to make the acquisition work effectively
D)Incompetence on the part of workers in the acquired firm
E)Difficulties in coordinating manufacturing activities

Accepted Answer

The answer of What is perhaps the most important reason...

Question 2

Which of the following is the probable consequence of a company's inability to integrate two divergent corporate cultures after an acquisition?
A)Low management turnover
B)Poor commercialization of the product
C)An inability to realize potential gains from synergies
D)The stock of highly diversified companies is valued lower
E)Risks are shared by all

Accepted Answer

One of the main reasons for an acquisition is to achieve synergies and make the combined entity more valuable than the sum of its parts. However, achieving these synergies requires the successful integration of the two companies, including their corporate cultures. If the cultures are divergent and cannot be integrated, it is likely that the potential gains from synergies will not be realized, resulting in lower profitability and value for the new company.

Question 3

Acquisitions often fail because of:
A)poor commercialization.
B)pre-acquisition screening that increases the time it takes to enter a market.
C)large-scale entry.
D)differences in corporate culture.
E)slowness in establishing significant market presence.

Accepted Answer

Differences in corporate culture can cause significant challenges in integrating acquired companies, leading to communication breakdowns, conflicts, and ultimately, the failure of the acquisition. Poor cultural fit can also result in the loss of key employees, customers, and business partners, as well as a decline in performance and productivity. Therefore, it is important to address cultural differences and align organizational values and objectives before pursuing any acquisition.

Question 4

At its simplest level,a joint venture may be thought of as:
A)a merger of two companies.
B)an acquisition of a smaller company by a larger company.
C)a form of strategic outsourcing.
D)a sign of weakness on the part of one of the companies.
E)pooling of resources by two or more firms to create new business.

Accepted Answer

A joint venture involves two or more firms pooling their resources to create a new business entity. It is not a merger, acquisition or a form of strategic outsourcing. It is also not necessarily a sign of weakness on the part of any of the companies involved.

Question 5

Stanley's services firm wants to enter an embryonic market,but it doesn't have enough cash to purchase the required assets.Which of the following strategies would you recommend to Stanley?
A)Diversify through acquisition
B)Do not diversify at all
C)Diversify with an internal new venture
D)Diversify with a joint venture
E)Diversify through vertical integration

Accepted Answer

Given Stanley's firm lacks sufficient cash to purchase the required assets for entering an embryonic market, a joint venture is a suitable strategy. It allows sharing the investment and risks with another company, making it easier to access the necessary resources without the full financial burden.

Question 6

In 2007,Google bought YouTube.This is an example of which of the following?
A)Partnership
B)Strategic alliance
C)Joint venture
D)Acquisition
E)Merger

Accepted Answer

Google's purchase of YouTube constitutes an acquisition, as Google purchased the entirety of YouTube's assets and operations.

Question 7

Which of the following statements is false?
A)Joint ventures are preferable to acquisitions when the new business is related to the existing business.
B)Acquisitions are preferable to new ventures when speed is important.
C)Joint ventures are generally preferable to acquisitions when entry barriers are high.
D)Acquisitions can be both a reason for corporate decline and part of a turnaround strategy.
E)New ventures are preferable to acquisitions in the embryonic stage of the industry life cycle.

Accepted Answer

The answer of Which of the following statements is false?
A)Joint...

Question 8

Which of the following is not a reason for the failure of an acquisition to generate the gains originally expected of it?
A)Poor post-acquisition integration
B)Overestimation of the potential gains to be derived from synergy
C)The high cost of making acquisitions
D)Lack of pre-acquisition screening
E)Overestimation of the potential costs of realizing synergies

Accepted Answer

The answer of Which of the following is not a...

Question 9

Differentiate between joint venture and acquisition as a method to enter new industries.Discuss the advantages and disadvantages associated with each.

Accepted Answer

The answer of Differentiate between joint venture and acquisition as...

Question 10

Identify and discuss the profitability justifications for pursuing a multibusiness model based on diversification.

Accepted Answer

The answer of Identify and discuss the profitability justifications for...

Question 11

What are the two general types of diversification and when would one be preferred over the other?

Accepted Answer

The answer of What are the two general types of...

Question 12

Joint ventures:
A)are an alternative to new ventures.
B)are attractive when speed is important.
C)are attractive when entry barriers are high.
D)should be done on a small scale.
E)reduce the risk of loss of proprietary knowledge.

Accepted Answer

The answer of Joint ventures:
A)are an alternative to new ventures.
B)are...

Question 13

Which of the following is not necessary for a successful acquisition?
A)A good bidding strategy
B)A clear strategic rationale for making the acquisition
C)Quick completion of the acquisition
D)Thorough pre-acquisition screening
E)Post-acquisition audit to review the process and discuss ways to improve it

Accepted Answer

While completing the acquisition in a timely manner may be desirable, it is not necessarily a requirement for success. The other options listed are all important factors that contribute to a successful acquisition.

Quiz 10: Corporate Level Strategy: Related and Unrelated Diversification

What is perhaps the most important reason why acquisitions fail?

Which of the following is the probable consequence of a company's inability to integrate two divergent corporate cultures after an acquisition?

Acquisitions often fail because of:

At its simplest level,a joint venture may be thought of as:

Stanley's services firm wants to enter an embryonic market,but it doesn't have enough cash to purchase the required assets.Which of the following strategies would you recommend to Stanley?

In 2007,Google bought YouTube.This is an example of which of the following?

Which of the following statements is false?

Which of the following is not a reason for the failure of an acquisition to generate the gains originally expected of it?

Differentiate between joint venture and acquisition as a method to enter new industries.Discuss the advantages and disadvantages associated with each.

Identify and discuss the profitability justifications for pursuing a multibusiness model based on diversification.

What are the two general types of diversification and when would one be preferred over the other?

Joint ventures:

Which of the following is not necessary for a successful acquisition?