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Quizz 7

Name: Roll No:

1. 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.

2. Compared to internal product development, acquisitions allow quicker routes to:

a. expanded economies of scope.


b. new skills and new capabilities.
c. synergy within a portfolio of businesses.
d. financial economies of scale.

3. When GE reduced its emphasis in electronic markets by acquiring firms in the


financial services sector, it did so in part to reshape:

a. the structure of its industry.


b. its manufacturing processes.
c. its competitive scope.
d. its new product development process.

4. Research has shown that _____________________ the greater is the probability


that an acquisition will be successful.

a. the more related the acquired and acquiring firms are


b. the more diverse the resulting portfolio of competencies
c. the more disparate the corporate cultures
d. the more concentrated management attention is given to making acquisitions

5. The problems associated with acquisitions include all of the following EXCEPT:

a. paying too much for the target firm.


b. experiencing problems integrating the two firms.
c. the high costs of financing the acquisition.
d. developing too much market power.
6. The factors that lead to poor long-term performance by acquisitions include all of
the following EXCEPT firms:

a. not being diversified enough.


b. having too much debt.
c. being unable to achieve synergy.
d. growing too large.

7. Research shows that about _____ percent of mergers and acquisitions are
successful.

a. 20
b. 40
c. 60
d. 80

8. According to a researcher cited in the text, the _______________________ is


probably the single most important determinant of shareholder value creation in
mergers and acquisitions.

a. pre-acquisition negotiations phase


b. pre-acquisition due diligence phase
c. post-acquisition integration phase
d. post-acquisition restructuring phase

9. Without effective due diligence the:

a. acquiring firm is likely to overpay for an acquisition.


b. purchase price of the firm will be based on the firm’s past performance rather
than the prices of comparable acquisitions in that industry.
c. merger or acquisition is likely to be subject to excessive delays.
d. valuable opportunities may be lost to competing firms.

10. The due diligence process is least expensive when conducted by:

a. investment bankers.
b. management consultants.
c. the company’s internal staff.
d. accounting firms.

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