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Q:
Different ________ standards can require a firm pursuing international opportunities to change its current products or services to sell them into a nondomestic market.
A) financial
B) operational
C) fiscal
D) physical
Q:
Which one of the following is not a potential source of economies of scope for firms pursuing international strategies?
A) to develop new core competencies
B) to manage corporate risk
C) to control countertrade
D) to gain access to low-cost factors of production
Q:
International strategies are an example of ________ strategies.
A) corporate
B) business
C) functional
D) operational
Q:
In many ways, the transnational structure is similar to the centralized hub.
Q:
Firms can maintain traditional arm's-length market relationship between themselves and their nondomestic customers and still implement international strategies.
Q:
In a decentralized federation, each country in which the firm operates is organized as a full profit-and-loss division headed by a division general manager who is typically the president of the company in a particular country.
Q:
Government upheaval and the attendant risks to international firms are facts of life in some countries.
Q:
Hedging strategies reduce the political risks that firms assume when they enter into nondomestic markets.
Q:
Financial risks can be daunting when a firm first begins international operations.
Q:
Currency fluctuations can significantly affect the value of a firm's domestic investments.
Q:
A multinational strategy exploits all the advantages of both international integration and local responsiveness.
Q:
Local responsiveness can help firms be successful in addressing the local needs of nondomestic customers, thereby increasing demand for a firm's current products or services.
Q:
The ability to learn from operations can be helped if managers perceive that there is too much to be learned.
Q:
Unlearning requires a firm to modify or abandon traditional ways of engaging in business.
Q:
Learning from international operations is automatic.
Q:
One of the most compelling reasons for firms to begin operations outside their domestic markets is to refine their current core competencies and to develop new core competencies.
Q:
The search for low labor costs has led some firms to engage in international strategies to gain access to low-cost labor.
Q:
Gaining access to new customers is, perhaps, the most traditional reason why firms begin international operations.
Q:
A product or service can be at different stages of its life cycle in different countries.
Q:
Growth is the third stage in the product life cycle.
Q:
One estimate suggests that countertrade accounts for between 10 and 20 percent of world trade.
Q:
When international firms engage in countertrade, they receive payment for the products or services they sell into a country in the form of hard currency.
Q:
Because the value of hard currencies can fluctuate in the world economy, firms can manage their currency risk by engaging in various hedging strategies in world money markets.
Q:
Hard currencies are currencies that are traded, and thus have value, on international money markets.
Q:
Border levies are an example of tariffs.
Q:
Countervailing duties are an example of quotas.
Q:
Embargoes are an example of nontariff barriers.
Q:
Japanese retail distribution has historically been much more fragmented, and much less efficient, than the system that exists in either the United States or Western Europe.
Q:
Distribution problems are typically limited to developing economies.
Q:
In some international markets, adequate distribution networks exist but are tied up by new entrants to these markets.
Q:
In order for the basis of an international strategy to attract new customers, those products or services must address the needs, wants, and preferences of customers in foreign markets at least as well as, if not better than, alternatives.
Q:
Different physical standards are more challenging than differences in tastes for firms looking to sell their products or services outside the domestic market.
Q:
Differences in tastes can be a major challenge for firms looking to sell their products or services outside the domestic market.
Q:
Different physical standards can require a firm pursuing international opportunities to change its current products or services to sell them into a nondomestic market.
Q:
In 2012, more than 50 percent of General Motor's automobile sales came from outside the United States.
Q:
In 2012, about a third of Wal-Mart's sales revenues came from outside the United States.
Q:
To the extent that customers outside a firm's domestic market are willing and able to buy a firm's current products or services, implementing an international strategy can directly increase a firm's revenues.
Q:
The most obvious economy of scope that may motivate firms to pursue an international strategy is the potential new customers for a firm's current products or services that such a strategy might generate.
Q:
Products and services that a firm sells in its domestic market will always also sell in foreign markets.
Q:
The increased use of international strategies by both large and small firms suggests that the economic opportunities associated with operating in multiple geographic markets can be substantial.
Q:
International strategies are typically limited to just huge multinational companies.
Q:
International strategies are actually a special case of business strategies.
Q:
At some level, international strategies have existed since before the beginning of recorded time.
Q:
Discuss the four structural options for firms pursuing international strategies.
Q:
Describe the differences between market and hierarchical governance options for firms pursuing international strategies.
Q:
What is financial risk? How can firms hedge?
Q:
What is meant by political risk? What types of political risks do firms face?
Q:
Describe the transnational strategy.
Q:
What is the local responsiveness/international integration trade-off that firms face when they go into international markets?
Q:
Is learning from international operations automatic for firms? Why or why not?
Q:
What is countertrade? How is it useful in international business?
Q:
How are poison pills different from shark repellents?
Q:
Describe three major challenges that firms integrating acquisitions are likely to face.
Q:
Identify and discuss the three rules that target firm managers should follow to maximize the probability of earning economic profits from their merger and acquisition strategies.
Q:
Identify and discuss six rules that firms bidding on a target firm in an acquisition should follow to increase the possibility that an acquisition strategy will earn superior performance.
Q:
Describe and discuss five reasons why bidding firms might still engage in acquisitions even if, on average, they do not create value for a bidding firm's stockholders.
Q:
If there is one target firm with a current market value of $20,000 as a stand-alone entity and five bidding firms, each of which has a current market value of $30,000 as a stand-alone entity, and the value of the target firms and any of the bidding firms combined is $60,000, estimate the price the bidding firms would be willing to pay for the target firm and the return to stockholders of bidding and target firms when there is strategic relatedness between firms.
Q:
Identify the three potential sources of strategic relatedness between bidding and target firms that were detailed by Lubatkin in 1983 and the four general reasons why bidding firms might want to engage in merger and acquisitions as detailed by Jensen and Ruback in 1983.
Q:
Identify and differentiate between the five different FTC categories of mergers and acquisitions.
Q:
If there are five bidders (each of which has a current market value of $50,000 ) interested in a target firm that has no strategic relatedness with any of the bidding firms and has a current market value of $25,000, identify the economic profits that will be earned by both the bidding firm's equity holders and the target firm's equity holders and discuss this case.
Q:
Discuss the differences between mergers and acquisitions and differentiate between friendly and unfriendly acquisitions.
Q:
P&G is a leading consumer goods company in the United States that has grown its business through a combination of international growth, alliances, acquisitions and mergers. In 2003, P&G acquired the beauty care company Wella to acquire products that would complement its current product. In 2004, P&G acquired AG-Hutchison Ltd to establish a stronger presence in the Chinese consumer goods products market. In 2005, P&G acquired Gillette, another consumer goods company, in a deal worth approximately $57 billion dollars.
The most significant challenge P&G is likely to face in integrating each of the acquired companies into P&G's operations is likely to be ________ differences between P&G and each of the companies.
A) logistical
B) cultural
C) operational
D) distribution
Q:
P&G is a leading consumer goods company in the United States that has grown its business through a combination of international growth, alliances, acquisitions and mergers. In 2003, P&G acquired the beauty care company Wella to acquire products that would complement its current product. In 2004, P&G acquired AG-Hutchison Ltd to establish a stronger presence in the Chinese consumer goods products market. In 2005, P&G acquired Gillette, another consumer goods company, in a deal worth approximately $57 billion dollars.
If P&G's acquisition of Wella had been delayed because it had to overcome a stipulation in Wella's corporate bylaws requiring that more than 50% of Wella's board of directors had to approve the takeover, this would be an example of
A) the Pac Man defense.
B) a poison pill.
C) greenmail.
D) a shark repellent.
Q:
P&G is a leading consumer goods company in the United States that has grown its business through a combination of international growth, alliances, acquisitions and mergers. In 2003, P&G acquired the beauty care company Wella to acquire products that would complement its current product. In 2004, P&G acquired AG-Hutchison Ltd to establish a stronger presence in the Chinese consumer goods products market. In 2005, P&G acquired Gillette, another consumer goods company, in a deal worth approximately $57 billion dollars.
If Gillette's managers wanted to maximize the value that Gillette received from its acquisition by P&G, they should
A) seek information from P&G about the value that P&G will receive from its acquisition of Gillette.
B) not engage in negotiations with any bidder but P&G.
C) close the acquisition as quickly as possible.
D) stop the acquisition.
Q:
P&G is a leading consumer goods company in the United States that has grown its business through a combination of international growth, alliances, acquisitions and mergers. In 2003, P&G acquired the beauty care company Wella to acquire products that would complement its current product. In 2004, P&G acquired AG-Hutchison Ltd to establish a stronger presence in the Chinese consumer goods products market. In 2005, P&G acquired Gillette, another consumer goods company, in a deal worth approximately $57 billion dollars.
If P&G wanted to increase the probability that it would be able to earn superior economic performance from its acquisition of Gillette, P&G should
A) share information about Gillette with other potential bidders.
B) share information about strategic fit potential between P&G and Gillette with Gillette.
C) wait to submit its bid for Gillette until there are multiple interested bidders.
D) close the acquisition deal as quickly as possible.
Q:
P&G is a leading consumer goods company in the United States that has grown its business through a combination of international growth, alliances, acquisitions and mergers. In 2003, P&G acquired the beauty care company Wella to acquire products that would complement its current product. In 2004, P&G acquired AG-Hutchison Ltd to establish a stronger presence in the Chinese consumer goods products market. In 2005, P&G acquired Gillette, another consumer goods company, in a deal worth approximately $57 billion dollars.
If one of the reasons P&G acquired Gillette was to gain greater market power in key industries, this would be an example of ________ economies.
A) technical
B) pecuniary
C) diversification
D) vertical
Q:
P&G is a leading consumer goods company in the United States that has grown its business through a combination of international growth, alliances, acquisitions and mergers. In 2003, P&G acquired the beauty care company Wella to acquire products that would complement its current product. In 2004, P&G acquired AG-Hutchison Ltd to establish a stronger presence in the Chinese consumer goods products market. In 2005, P&G acquired Gillette, another consumer goods company, in a deal worth approximately $57 billion dollars.
P&G's purchase of AG-Hutchison Ltd in 2004 is an example of a
A) conglomerate merger.
B) vertical merger.
C) market extension merger.
D) conglomerate acquisition.
Q:
P&G is a leading consumer goods company in the United States that has grown its business through a combination of international growth, alliances, acquisitions and mergers. In 2003, P&G acquired the beauty care company Wella to acquire products that would complement its current product. In 2004, P&G acquired AG-Hutchison Ltd to establish a stronger presence in the Chinese consumer goods products market. In 2005, P&G acquired Gillette, another consumer goods company, in a deal worth approximately $57 billion dollars.
P&G's acquisition of Wella in 2003 is an example of a
A) market extension merger.
B) conglomerate merger.
C) vertical merger.
D) product extension merger.
Q:
P&G is a leading consumer goods company in the United States that has grown its business through a combination of international growth, alliances, acquisitions and mergers. In 2003, P&G acquired the beauty care company Wella to acquire products that would complement its current product. In 2004, P&G acquired AG-Hutchison Ltd to establish a stronger presence in the Chinese consumer goods products market. In 2005, P&G acquired Gillette, another consumer goods company, in a deal worth approximately $57 billion dollars.
Since both P&G and Gillette are consumer products firms, this acquisition is best described as a
A) vertical merger.
B) horizontal merger.
C) market extension merger.
D) conglomerate merger.
Q:
P&G is a leading consumer goods company in the United States that has grown its business through a combination of international growth, alliances, acquisitions and mergers. In 2003, P&G acquired the beauty care company Wella to acquire products that would complement its current product. In 2004, P&G acquired AG-Hutchison Ltd to establish a stronger presence in the Chinese consumer goods products market. In 2005, P&G acquired Gillette, another consumer goods company, in a deal worth approximately $57 billion dollars.
If Gillette's total market value on the day the deal was announced was $48.30 billion, P&G's $57 billion offer would represent a(n)
A) 18% acquisition premium.
B) 82% acquisition discount.
C) 82% acquisition premium.
D) 18% acquisition discount.
Q:
P&G is a leading consumer goods company in the United States that has grown its business through a combination of international growth, alliances, acquisitions and mergers. In 2003, P&G acquired the beauty care company Wella to acquire products that would complement its current product. In 2004, P&G acquired AG-Hutchison Ltd to establish a stronger presence in the Chinese consumer goods products market. In 2005, P&G acquired Gillette, another consumer goods company, in a deal worth approximately $57 billion dollars.
If P&G's bid for Gillette was invited by Gillette's management, this would be an example of a
A) hostile acquisition.
B) joint venture.
C) friendly acquisition.
D) merger.
Q:
________ is an example of an ineffective and inconsequential response with the idea that sometimes a bidding firm is interested in just a few of the businesses currently being operated by the target firm.
A) A Pac Man defense
B) A Blue Man defense
C) A crown jewel sale
D) A golden parachute defense
Q:
________ does not affect the wealth of target firm equity holders.
A) Blue Man defense
B) Pac Man defense
C) Golden parachute
D) Silver parachute
Q:
Supermajority voting rules are an example of a
A) poison pill.
B) white knight.
C) golden parachute.
D) shark repellent.
Q:
________ include a variety of relatively minor corporate governance changes that, in principle, are supposed to make it more difficult to acquire a target firm.
A) Shark repellents
B) White knights
C) Greenmail
D) Poison pills
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:
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:
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:
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