Question 1

The assessment of a target firm by a potential acquirer is known as benchmarking.

Accepted Answer

The assessment of a target firm by a potential acquirer is known as due diligence, not benchmarking. Benchmarking involves comparing a company's financial and operational metrics to those of its competitors or industry averages.

Question 2

Divestment is a form of investment that diverges funds from older projects to new, high risk projects.

Accepted Answer

Divestment refers to the selling off or liquidation of existing assets or investments to decrease risk exposure, reduce costs, or redirect funds towards more profitable or strategic opportunities. It is not a form of investment that involves allocating funds towards new, high-risk projects.

Question 3

Subsidiaries that have a leading role within an MNE to develop new products or technology are also known as:&#10;A)centres of excellence&#10;B)centres of excel&#10;C)centres of hubs&#10;D)centres of hubris

Accepted Answer

Subsidiaries that have a leading role in developing new products or technology are commonly referred to as "centres of excellence." These subsidiaries have specialized knowledge, expertise, and capabilities that are essential to the MNE's overall success and competitive advantage. They are responsible for conducting research and development, designing new products, and creating new technologies that can be leveraged by the entire MNE.

Question 4

Small private firms that prosper in a market niche while keeping a low profile are also known as:&#10;A)SMEs&#10;B)single line businesses&#10;C)niche prospectors&#10;D)hidden champions

Accepted Answer

Small private firms that prosper in a market niche while keeping a low profile are known as "hidden champions." These firms have a dominant market position in a narrow market segment and have a strong focus on innovation. Their success is often based on providing high-quality products or services that meet the specific needs of their customers. They tend to be leaders in their industry but are not well-known to the general public.

Question 5

Risk diversification is the reduction of the risk profile of a company by investing only in one country or industry.

Accepted Answer

Risk diversification involves investing in multiple countries or industries to reduce the overall risk profile of a company. Investing in only one country or industry would actually increase the risk profile of the company.

Question 6

An 'acquisition premium' is:&#10;A)The increase in the stock price of the acquirer associated with the acquisition.&#10;B)The pay-off to the directors of the acquired company in return for their cooperation with the acquiring firm.&#10;C)The difference between stock prices of the acquirer and the acquired company.&#10;D)The difference between the market price of the acquired firm before the acquisition and the price offered by the acquirer.

Accepted Answer

The acquisition premium refers to the difference between the market price of the acquired company before the acquisition and the price offered by the acquirer. This premium is usually paid to convince the shareholders of the acquired company to sell their shares to the acquirer. It is usually expressed as a percentage of the pre-acquisition market price.

Question 7

Global key accounts are:&#10;A)cost positions that are aggregated globally&#10;B)distribution channels that cover multiple countries&#10;C)customers that are served at multiple sites but with central negotiation of contracts&#10;D)suppliers that have established production facilities in several countries

Accepted Answer

Global key accounts refer to customers who are served at multiple sites with central negotiation of contracts. These customers have a significant impact on the business and are typically large, multinational corporations. They require a coordinated approach across different countries and regions to ensure that they have a consistent experience and receive the same level of service and support.

Question 8

Strategic alliances do not involve foreign direct investment.

Accepted Answer

Strategic alliances can involve various forms of cooperation between companies, including joint ventures and partnerships that may entail foreign direct investment (FDI) when a company invests directly in facilities to produce or market a product in a foreign country.

Question 9

Which of the following is not an element of Ghemawat's AAA typology of global strategies?&#10;A)acquisition&#10;B)adaptation&#10;C)aggregation&#10;D)arbitrage

Accepted Answer

Acquisition is not one of the elements of Ghemawat's AAA typology of global strategies. The elements are adaptation, aggregation, and arbitrage.

Question 10

Synergies don't arise in the form of new values created, or in the form of cost savings.

Accepted Answer

Synergies can arise in both the form of new values created and in the form of cost savings.

Question 11

In the context of mergers and acquisitions, organizational fit refers to the cultural and structural characteristics of the two organizations that affect the ability to integrate the acquired company.

Accepted Answer

The answer of In the context of mergers and acquisitions,...

Deck 13: Competitive Dynamics