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Which of the following statements regarding internal development as a means of diversification is false?


A) Many companies use internal development to extend their product or service offers.
B) An advantage of internal development is that it is generally faster than other means of diversification.
C) The firm can capture wealth created without having to share the wealth with alliance partners.
D) Firms can often develop products or services at a lower cost if they rely on their own resources instead of external funding.

E) A) and D)
F) A) and C)

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

A) True
B) False

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True

One of the reasons it is said that only the investment banker wins when a company is acquired is that they


A) assure the newly acquired company will be successful.
B) continue to work with the two companies involved.
C) collect huge up-front fees regardless of the outcome afterwards.
D) monitor the progress of both companies for long term growth.

E) A) and B)
F) All of the above

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Benefits derived from horizontal and hierarchical relationships are mutually exclusive.

A) True
B) False

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A firm should consider vertical integration when


A) the competitive situation is highly volatile.
B) customer needs are evolving.
C) the suppliers of raw materials to the firm are unable to maintain quality standards.
D) the suppliers of the firm willingly cooperate with the firm.

E) B) and C)
F) All of the above

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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) expansion.
B) divestiture.
C) acquisition.
D) cost savings.

E) A) and B)
F) None of the above

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Capital restructuring involves changing the ________ mix.


A) cash
B) human resource
C) debt-equity
D) management

E) All of the above
F) None of the above

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Many leading high-tech firms such as Google,Apple,and Intel have dramatically enhanced their revenues,profits,and market values through a wide variety of diversification initiatives.Which of the following is not such an initiative?


A) acquisitions
B) strategic alliances
C) stockholder enhancement
D) joint ventures

E) A) and C)
F) All of the above

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Discuss the three basic means by which a firm can go about achieving synergy and create value for its shareholders.

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Feedback: There are three basic means.Fi...

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Portfolio management matrices are applied to what level of strategy?


A) departmental level
B) business level
C) corporate level
D) international level

E) All of the above
F) A) and D)

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In managing the corporate portfolio,the BCG matrix would suggest that


A) dogs should be invested in to increase market share and become cash cows.
B) stars are in low growth markets and can provide excess cash to fund other opportunities.
C) cash cows require substantial cash outlays to maintain market share.
D) question marks can represent future stars if their market share is increased.

E) None of the above
F) A) and D)

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When using a BCG matrix,a ________ is a business that currently holds a large market share in a rapidly growing market and has minimal or negative cash flow.


A) star
B) dog
C) cash cow
D) question mark

E) All of the above
F) A) and D)

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Research shows that most acquisitions of public corporations result in value creation rather than value destruction.

A) True
B) False

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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 market value by leveraging core competencies.
B) related diversification to acquire economies of scope by sharing.
C) unrelated diversification to acquire financial synergies through portfolio management.
D) related diversification to acquire parenting, restructuring, and financial synergies through corporate restructuring and parenting.

E) None of the above
F) A) and B)

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Which of the following is not part of a good guideline list for managing strategic alliances?


A) establishing a clear understanding between partners
B) not shortchanging your partner
C) relying primarily on a contract to make the joint venture work
D) working hard to ensure a collaborative relationship between partners

E) B) and C)
F) B) and D)

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The antitakeover tactic,________,is when a firm offers to buy shares of their stock from a company (or individual) planning to acquire their firm at a higher price than the unfriendly company paid for it.


A) golden parachute
B) poison pill
C) greenmail
D) scorched earth

E) A) and B)
F) A) and C)

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C

The term "golden parachute" refers to


A) a clause requiring that huge dividend payments be made upon takeover.
B) pay given to executives fired because of a takeover.
C) financial inducements offered by a threatened firm to stop a hostile suitor from acquiring it.
D) managers of a firm in a hostile takeover approaching a third party about making the acquisition.

E) All of the above
F) None of the above

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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 low cost
B) an internal development
C) a diversification
D) a divestiture

E) All of the above
F) None of the above

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Explain the purpose of antitakeover tactics and provide a specific example of an actual antitakeover tactic.

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Feedback: Unfriendly or hostile takeovers can occur when the company stock becomes undervalued.A competing organization can buy the outstanding stock of a takeover candidate in sufficient quantity to become a large shareholder.Then it makes a tender offer to gain full control of the company.If the shareholders accept the offer,the hostile firm buys the target company and either fires the target firm management team or strips the team members of their power.Thus,antitakeover tactics are common,including greenmail,golden parachutes,and poison pills.

Divesting of businesses can accomplish many different objectives,except


A) enabling managers to focus their efforts more directly on the core businesses of the firm.
B) providing the firm with more resources to spend on more attractive alternatives.
C) raising cash to help fund existing businesses.
D) dispersing manager focus.

E) B) and C)
F) A) and D)

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