Corporate Strategies and Acquisitions - Quiz

1. If a multinational firm fails to effectively integrate their acquisitions, this can result in a. divestiture. 2. Yahoo purchased Tumblr for 1.1 billion in 2013 but wrote off 80 percent of the investment by the middle of 2016. They considered this to be a poor a. acquisition. 3. In 2012, Microsoft admitted to a major ________ mistake when it wrote off essentially the entire 6.2 billion USD it paid for a digital advertising firm, aQuantive, that it purchased in 2007. a. acquisition 4. If a multinational firm paid too high a premium for the common stock of the company, this can lead to a. divestiture. 5. Polaris, a manufacturer of snowmobiles, motorcycles, watercraft, and off-road vehicles, shares manufacturing operations across its businesses. It also has a corporate research and development facility and staff departments that support all the Polaris operating divisions. This is an example of creating value by using a. related diversification to acquire economies of scope by sharing. 6. The corporate office of Novartis, formerly Ciba-Geigy, acts to improve many key activities, including resource allocation and reward and evaluation systems. This is an example of creating value by using a. unrelated diversification to acquire financial synergies through portfolio management. 7. Microsoft offered in 2016 to buy LinkedIn for 26.2 billion USD which was 50 percent higher than the value for LinkedIn the day before. This high premium offer was necessary for Microsoft to complete ________ initiative. a. a diversification 8. When a firm diversifies into ________ businesses, the primary potential benefits to be derived come from ________ relationships—those businesses that share intangible and tangible resources. a. related; horizontal 9. Vertical integration is attractive when a. transaction costs are higher than administrative costs. 10. For a core competence to be a viable basis for the corporation strengthening a new business unit, there are three requirements. Which one of the following is not one of these requirements? a. The new business must have an established large market share. 11. Unbalanced capacities that limit cost savings, difficulties in combining specializations, and reduced flexibility are disadvantages associated with a. vertical integration. 12. A firm should consider vertical integration when a. the suppliers of raw materials to the firm are unable to maintain quality standards. 13. Portfolio management frameworks, such as the BCG matrix, share which of the following characteristics? a. Grid dimensions are based on external environments and internal capabilitiesmarket positions. 14. Portfolio models are used to assist a firm in a. achieving a balanced portfolio of businesses. 15. ________ is when the corporate office helps subsidiaries make wise choices in their own acquisitions, divestures, and new ventures, thereby creating value within business units. a. Parenting 16. Research shows that a key competence of high-performance diversified firms is the ability to a. effectively allocate financial capital. 17. Portfolio management matrices are applied to what level of strategy? a. corporate level 18. Capital restructuring involves changing the ________ mix. a. debt-equity 19. Factors that directly affect the merger and acquisition environment include all the following except a. managerial style. 20. Which of the following is not part of a good guideline list for managing strategic alliances? a. relying primarily on a contract to make the joint venture work 21. Ford and VW signed a memorandum of understanding to work together to develop autonomous vehicles. Which of the following best explains the potential advantage for them? a. developing and diffusing new technologies 22. Zara, a Spanish clothing company, often uses strategic alliances when entering new geographic markets. Which of the following best explains the potential advantage for them? a. gaining knowledge about different cultures and regulatory environments 23. In 2014, Apple purchased Beats Electronics for billion USD. While Apple valued the product portfolio of Beats, its primary aim was to pull the founders of Beats, Jimmy Iovine and Dr. Dre (aka Andrew Young), into the Apple family. This is an example of acquiring firms using acquisitions to acquire a. critical human capital. 24. ________ is when a new legal entity is formed by a combination or consolidation of two firms. a. A merger 25. Disney has chosen to discontinue its content distribution agreements with Netflix and Amazon. Why? a. Netflix and Amazon are developing their own content.