Pace University MGT 490 Chapter 6 Quiz Spring 2015

(MGT490 20353 Spring 2015)

Assignment:

Chapter 06 Quiz

1.

award:

10 out of

10.00 points

Casio, a giant electronic products producer, synthesizes it abilities in miniaturization, microprocessor design, material science, and

ultrathin precision castings to produce digital watches. It uses the same skills to produce other non-related products. This skillset

is a _______________.

shared activity

economy of scope

core competency

strategic resource

2.

award:

10 out of

10.00 points

A golden parachute is a prearranged contract with managers specifying that, in the event of a hostile takeover, the target company managers will not be paid a significant severance package.

True

False

3.

award:

10 out of

10.00 points

Diversification initiatives must be justified by the creation of value for employees.

True

False

4.

award:

10 out of

10.00 points

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?

The new business must create superior value.

The collection of competencies should be unique, so that they cannot be easily imitated.

The new business must be similar to existing businesses to benefit from a core competence.

The competence must help the business lose market position relative to its competition.

5.

award:

10 out of

10.00 points

Corporate restructuring includes capital and asset restructuring as well as ________.

technology restructuring

procurement restructuring

management restructuring

global diversification

6.

award:

10 out of

10.00 points

Acquisitions, according to research, usually result in value destruction rather than value creation.

True

False

7.

award:

10 out of

10.00 points

Business level strategy addresses two related issues: what businesses should a corporation compete in and how can these

businesses be managed so that they create synergy.

True

False

8.

award:

10 out of

10.00 points

Divesting of businesses can accomplish many different objectives, except ________.

providing the firm with increased cash resources

raising cash to help fund existing businesses

enabling managers to focus their efforts more directly on the core businesses of the firm

providing the firm with fewer resources to spend on more attractive alternatives

9.

award:

10 out of

10.00 points

The Cisco acquisition of Pure Digital Technologies, the parent of the Flip video camera, failed because Cisco was unable to respond rapidly to

market pressures.

True

False

10.

award:

10 out of

10.00 points

In 2012, Hewlett-Packard wrote off $9 billion of the $11 billion it paid for Autonomy, a software company that it purchased one year earlier.

This is an example of a failed merger.

True

False

11.

award:

10 out of

10.00 points

Which of the following is a reason for merger and acquisition failures?

The acquiring company pays too low a price for the common stock of the target company.

The acquired company assets are integrated into the acquiring company business lines.

Top executives act in their best interests rather than those of the shareholders.

The acquisition leads to value creation.

12.

award:

10 out of

10.00 points

A disadvantage of mergers and acquisitions is that they can enable a firm to rapidly enter new product markets.

True

False

13.

award:

10 out of

10.00 points

Diversification initiatives include all of the following except ____________________.

employee rewards

mergers and acquisitions

strategic alliances

joint ventures

14.

award:

10 out of

10.00 points

Shaw Industries, a giant carpet manufacturer, increases its control over raw materials by producing much of its own polypropylene

fiber, a key input to its manufacturing process. This is an example of using related diversification to achieve value by leverage

core competencies to achieve economies of scope.

True

False

15.

award:

10 out of

10.00 points

According to Michael Porter, there is a tremendous allure to mergers and acquisitions. It is the big play, the dramatic gesture. With

one stroke of the pen you can add billions to size, get a front page story, and create excitement in markets.

True

False

16.

award:

10 out of

10.00 points

Companies use the tactic of ________ to give shareholders certain rights in the event of a takeover by another firm.

scorched earth

golden parachute

greenmail

poison pill

17.

award:

10 out of

10.00 points

Restructuring requires the corporate office to find either poorly performing firms with unrealized potential or firms in industries on the

threshold of negative change.

True

False

18.

award:

10 out of

10.00 points

Related diversification enables a firm to benefit from vertical relationships across different businesses in the diversified corporation by

leveraging core competencies and sharing activities.

True

False

19.

award:

10 out of

10.00 points

These kinds of companies create value through management expertise in areas such as budgeting, planning, procurement, and human

resource management.

restructured

parent

competition

leveraged

20.

award:

10 out of

10.00 points

Related diversification enables a firm to benefit from economies of scope, which are cost increases that are derived from leveraging core

competencies.

True

False

21.

award:

10 out of

10.00 points

When a hostile firm buys a large block of outstanding target company stock and the target company management feels that a tender

offer is impending, they offer to buy the stock back from the hostile company at a higher price than the unfriendly company paid for it.

This is known as greenmail.

True

False

22.

award:

10 out of

10.00 points

Among the disadvantages of acquisitions are the inexpensive premiums that are frequently paid to acquire a business.

True

False

23.

award:

10 out of

10.00 points

With unrelated diversification, potential benefits can be gained from vertical or hierarchical relationships; that is, the creation of synergies

from the interaction of the corporate office with the individual business units.

True

False

24.

award:

10 out of

10.00 points

MetLife was able to dramatically expand its global footprint by acquiring Alico, a global player in the insurance business from AIG in 2010 when

AIG was in financial distress. This shows that not all diversification moves erode performance.

True

False

25.

award:

10 out of

10.00 points

The downsides or limitations of mergers and acquisitions include all of the following, EXCEPT:

It is a rapid means to enter new markets and acquire skills and competences.

There can be many cultural issues that can doom an otherwise promising acquisition.

Difficulties exist in integrating the activities and resources of the acquired firm into on-going operations.

Premiums that are rarely paid to acquire a business are expensive