Q&A Hero

Q: (p. 289) Short-term objectives are more consistent when they clearly state what is to be accomplished, when it will be accomplished and how its accomplishment will be: A. Qualified B. Benchmarked C. Measured D. Strategized

Q: A ________ is another bidding firm that agrees to acquire a particular target in the place of the original bidding firm. A) golden parachute B) greenmail C) white knight D) crown jewel

Q: (p. 289) Difficulties in quantifying objectives often can be overcome by initially focusing on measurable activity and then identifying measurable A. resources B. capabilities C. outcomes D. policies

Q: The most significant challenge in integrating bidding and target firms has to do with A) accounting differences. B) cultural differences. C) operational differences. D) logistic differences.

Q: Mergers and acquisitions used to create diversification strategies should be managed through the A) M-form structure. B) functional structure. C) U-form structure. D) matrix structure.

Q: (p. 289) Which of the following is NOT an example of a quality of effective short-term objectives? A. Measurability B. Priorities C. Definition of the market D. Linked to long-term objectives

Q: (p. 289) ______ identify who is responsible for each action in the plan. A. Action ideas B. Long-term objectives C. Action plans D. Policies

Q: A ________ is a compensation arrangement between a firm and its senior management team that promises these individuals substantial cash payment if their firm is acquired and they lose their jobs in the process. A) white knight agreement B) greenmail agreement C) shark repellent D) golden parachute

Q: (p. 289) Which of the following items is NOT an example of how action plans enhance short-term objectives? A. Specificity B. Link to long-term strategy C. Time frame for completion D. Definition of who is responsible for what

Q: Firms using ________ fend off an acquisition by taking over the firm or firms bidding for them. A) shark repellents B) a crown jewel sale C) the Pac Man defense D) a golden parachute

Q: (p. 288) _______ are usually accompanied by subsequent action plans. A. Action ideas B. Long-term objectives C. Short-term objectives D. Policies

Q: ________ is (are) a maneuver in which a target firm's management purchases any of the target firm's stock owned by a bidder and does so for a price that is greater than the current market value of that stock. A) Standstill agreements B) Poison pills C) Shark repellents D) Greenmail

Q: (p. 288) Short-term objectives are usually accompanied by subsequent: A. Action ideas B. Long-term objectives C. Action plans D. Policies

Q: To ensure that the owners of target firms appropriate whatever value is created by a merger or acquisition, managers in these target firms should A) create a thinly traded market for their firm. B) seek information from bidders. C) close the acquisition deal quickly. D) limit the number of bidders involved in the bidding competition.

Q: (p. 288) Short-term objectives assist strategy implementation by identifying measurable outcomes of action plans or functional activities, which can make feedback, correction and evaluation: A. More relevant and acceptable B. More expensive C. More difficult D. More geared toward growth

Q: A thinly traded market is a market where A) there are only a small number of buyers and sellers. B) many firms are implementing acquisition strategies. C) information about opportunities in this market is widely known. D) the only important interest is to maximize the value of a firm.

Q: (p. 288) Discussion about and agreement on short-term objectives help raise issues and potential conflicts within an organization that usually: A. Need little coordination B. Require additional personnel C. Focus on public relations D. Require organizational coordination

Q: Which of the following actions should bidding firm managers take to help earn superior performance in an acquisition strategy? A) Share information with other bidders. B) Delay the closing of the deal. C) Avoid winning bidding wars. D) Operate in competitive acquisition markets.

Q: (p. 288) If X-Corp.'s car polish division has committed to a 30 percent gain in revenue over six years, they must consider the specific target in revenue during the current quarter to indicate they are making appropriate progress. This smaller objective for the fiscal quarter is called a: A. Short-term objectives B. Short-term technique C. Long-term objective D. Strategic goal

Q: Managers of bidding firms continue to engage in merger or acquisition strategies even though they usually do not generate profits for bidding firms in order to A) ensure survival. B) generate free cash flow. C) reduce agency problems. D) reduce managerial hubris.

Q: (p. 288) Short-term objectives __________ long-term objectives. A. Limit the effectiveness of B. Operationalize C. Decrease the need for D. Justify

Q: Research suggests that, on average, acquisitions increased the market value of target firms by about ________ percent and ________. A) 50; left the market value of the bidding firms unchanged B) 25; left the market value of the bidding firms unchanged C) 50; increased the market value of the bidding firms by 25 percent D) 25; increased the market value of the bidding firms by 15 percent

Q: (p. 288) Short-term objectives are usually: A. Completed within two months B. Quantitative C. Qualitative D. Set to be completed within five years

Q: In a(n) ________, a firm, typically working with an investment banker, sells its equity to the public at large. A) FTC B) merger C) IPO D) acquisition

Q: (p. 288) ___________ are measurable outcomes achievable or intended to be achieved in one year or less. A. Targets B. Goals C. Short-term objectives D. Long-term objectives

Q: ________ firms typically raise money from numerous smaller investors, which they then invest in a portfolio of entrepreneurial firms. A) Business angel B) Venture capital C) Closely held D) Private equity

Q: (p. 288) To make business strategies, grand strategies and long-term objectives a reality, the people in an organization who ________ need guidance in exactly what they need to do. A. "Do the work" B. Make corporate decisions C. Manage the business unit D. Compete

Q: Wealthy individuals who provide capital to entrepreneurs to help them grow their businesses are known as A) business angels. B) venture capitalists. C) stockholders. D) CEOs.

Q: (p. 288) Business strategies, grand strategies, and ______ are critically important in crafting a successful future. A. Long-term objectives B. Core rigidities C. Business units D. Functional hierarchies

Q: In a related acquisition, if there is one target firm and ten bidding firms, and the value of each of the bidding firms as a stand-alone entity is $50,000 and the value of the target firm as a stand-alone entity is $30,000, the market value of the combined entity will be A) $0.00. B) less than $80,000. C) $80,000. D) more than $80,000.

Q: Which one of the following is not one of the reasons that Jensen and Ruback listed as to why bidding firms might want to engage in merger and acquisition strategies? A) To reduce production or distribution costs B) To gain market power in product markets C) To expand individual managers' power within an organization D) To eliminate inefficient target management

Q: What is patching? Describe patching and its corporate focus.

Q: Describe size, age, management, business definition, linkages and other factors as the focus of strategic analysis and choice across multiple businesses and their interface with a parent company.

Q: Which of the following is a financial motivation for why bidding firms might want to engage in merger and acquisition strategies? A) To increase leverage opportunities B) To capture economies of scale C) To adopt more efficient production or organizational technology D) To engage in vertical integration

Q: What is the parenting framework? Briefly describe this perspective.

Q: ________ economies are achieved by improving a firm's performance relative to its risk attributes or lowering its risk attributes relative to its performance. A) Technical B) Diversification C) Pecuniary D) Market

Q: ________ economies are achieved by the ability of firms to dictate prices by exerting market power. A) Pecuniary B) Technical C) Diversification D) Production

Q: What does it mean to leverage core competencies?

Q: Why must each core competency provide a relevant competitive advantage to the intended businesses when pursuing a synergy approach?

Q: Which of the following is a source of diversification economies? A) Marketing B) Production C) Scheduling D) Portfolio management

Q: What two elements are critical in meaningful shared opportunities? Identify each and give an example.

Q: ________ economies are scale economies that occur when the physical processes inside a firm are altered so that the same amounts of input produce a higher quantity of outputs. A) Pecuniary B) Diversification C) Technical D) Vertical

Q: Identify some critical limitations and shortcomings of the portfolio approach to strategic analysis.

Q: If there are no vertical, horizontal, product extension, or market extension links between firms, the FTC defines the merger or acquisition activity between firms as a ________ merger. A) conglomerate B) vertical C) horizontal D) product extension

Q: Identify and describe the four industry environments defined by the two dimensions of BCG's strategic environments matrix.

Q: When eBay acquired Baaze.com, an Indian auction firm, in order to enter the Indian online auction market, this was an example of a ________ merger. A) product extension B) market extension C) conglomerate D) vertical

Q: What is the industry attractiveness-business strength matrix? How does this improve upon the BCG matrix?

Q: In a ________ merger, firms acquire complementary products through their merger and acquisition activities. A) vertical B) market extension C) product extension D) horizontal

Q: If eBay were to acquire a smaller online auction company, this would be an example of a ________ merger. A) conglomerate B) vertical C) market extension D) horizontal

Q: Describe the elements of the BCG growth-share matrix.

Q: What are portfolio techniques? How do they help multibusiness firms?

Q: If an electronics manufacturer were to acquire a chain of retail electronic stores to sell its products, this would be an example of a ________ merger. A) vertical B) horizontal C) market extension D) product extension

Q: (p. 279) The fundamental argument of the _______ approach is that no one can predict how long a competitive advantage will last, particularly in turbulent markets. A. Patching B. Parenting C. Portfolio D. Strategic environment

Q: In an unrelated acquisition, if 5 firms are interested in acquiring a firm and each of the bidding firms had a current market value of $30,000 while the current market value of the target firm is $20,000, this acquisition is likely to generate economic profits of ________ for the acquiring firm. A) $10,000 B) $20,000 C) $50,000 D) $0.00

Q: (p. 279) _______ need to be brief, be axiomatic and convey fundamental guidelines to decisions or actions. A. Key rules B. Fundamental rules C. Competitive advantages D. Simple rules

Q: The price of each of a firm's shares multiplied by the number of shares outstanding represents the firm's A) total equity base. B) current market value. C) total market share. D) current market share.

Q: (p. 279) Simple rules need to: A. Provide just enough structure to limit managers' flexibility to a safe amount B. Capture opportunities that may not always be consistent with corporate intent C. Provide enough structure to allow managers to move quickly to capture opportunities that are consistent with corporate intent D. Define the sources of competitive advantage within a firm's industry

Q: In the first 11 months of 2008, there were ________ acquisitions or mergers in the United States. A) 3,290 B) 4,160 C) 5,270 D) 8,190

Q: (p. 279) Spelling out key features of how a process is executed is the purpose of which type of simple rules? A. Boundary rules B. Priority rules C. How-to Rules D. Exit rules

Q: In 2007, the total value of announced merger and acquisition activities in the United States was A) $2.5 trillion B) $1.7 trillion. C) $3.0 trillion. D) $5.0 trillion.

Q: (p. 279) Gizmo Co. has rules for product development. Its project teams must know when a product has to be delivered to the customer and total product development time must be less than 1 year. This represents an example of: A. Exit rules B. Timing rules C. Boundary rules D. Priority rules

Q: When Sears and Kmart, two retail firms of relatively equal size in the United States, agreed to combine their assets, this was an example of a(n) A) joint venture. B) acquisition. C) merger. D) equity agreement.

Q: (p. 279) Firms should use _______ to help managers decide when to pull out of old opportunities that are no longer promising. A. Exit rules B. Boundary rules C. Abandonment rules D. Priority rules

Q: The difference between the current market price of a target firm's shares and the price a potential acquirer offers to pay for those shares is known as an A) acquisition premium. B) acquisition discount. C) acquisition margin. D) acquisition price.

Q: (p. 279) _________ focus on which opportunities can be pursued and which ones are beyond pursuing. A. Timing rules B. Boundary rules C. Financial rules D. Project rules

Q: When a firm has not sold shares on the public stock market, it is known as A) closely held. B) privately held. C) publicly traded. D) a small cap stock.

Q: (p. 279) Which type of simple rules help managers rank the accepted opportunities? A. How-to rules B. Financial rules C. Priority rules D. Boundary rules

Q: A(n) ________ acquisition occurs when the management of a target firm wants to be acquired. A) hostile B) admirable C) strategic D) friendly

Q: (p. 279) The position-based approach to strategy works best in: A. Moderately changing, well-structured markets B. Rapidly changing, ambiguous markets C. Turbulent markets D. Slowly changing, well-structured markets

Q: When one firm acquires a(n) ________ of another firm, it has acquired enough of that firm's assets so that the acquiring firm is able to make all the management and strategic decisions in the target firm. A) market stake B) equity share C) controlling share D) equity stake

Q: (p. 278) Eisenhardt and Sull suggest that managers should flexibly seize opportunities: A. As long as that flexibility is disciplined B. As long as the opportunities has positive net present value C. As long as the capital raised in capital markets can finance the opportunities D. As long as the managers keep a corporate strategic focus on profitability

Q: A firm engages in a(n) ________ when it purchases a second firm. A) acquisition B) joint venture C) strategic alliance D) equity alliance

Q: (p. 278) According to the patching approach, strategic analysis should: A. Focus on strategic processes alone B. Focus on strategic processes more than strategic positioning C. Focus on strategic positioning more than strategic planning D. Focus on strategic positioning more than strategic processes

Q: The value that a bidding firm brings to a target firm through an acquisition should be discounted by the cost of strategizing to implement an acquisition.

Q: (p. 279) Under the ________ approach, establishing a vision, building resources and leveraging across markets are all strategic steps to be taken by the firm. A. Patching B. Parenting C. Resources D. Position

Q: Unfriendly takeovers can generate anger and animosity among the target firm management that is directed toward the management of the bidding firm.

Q: (p. 278) The strategic logic of patching is to: A. Pursue more resources B. Leverage resources C. Establish a defensible position D. Pursue opportunities

Q: Operational, functional, strategic, and cultural differences between bidding and target firms can all be compounded by the merger and acquisition processespecially if that process was unfriendly.

Q: (p. 278) When markets are turbulent and rapidly changing, _______ is seen as critical to the creation of economic value in a multi-business company. A. Positioning B. Leveraging resources C. Patching D. Parenting

Q: Perhaps the most significant challenge in integrating bidding and target firms has to do with cultural differences.