Deck 12: Mergers and Acquisitions

Question 1

If a company is able to use one set of inputs to produce a wider range of products and services, what is this ability called?

A) economies of scale
B) economy-of-advantage
C) economy-of-scope
D) economies of productivity

Answer 1

C

Question 2

Which of the following is typically NOT an item included in a contingency plan for a merger?

A) financial projections
B) negotiation skills training
C) methods of communicating
D) chain of command

Answer 2

A

Question 3

What is the growth strategy that results in the fastest growth for an organization?

A) leveraging current customers
B) opening new markets internationally
C) corporate joint ventures
D) mergers and acquisitions

Answer 3

D

Question 4

Why was the merger of Alberta Energy with PanCanadian Energy deemed a stunning success?

A) The merger was extremely fast.
B) The merger was financially motivated.
C) The merger was employee-oriented.
D) The merger was focused on unionization.

Question 5

What type of strategy is applied when the targeted company makes a counter-offer for the bidding firm?

A) hostile takeover
B) poison pill
C) white knight
D) Pac-Man

Question 6

How do you describe the situation where a company experiences a feeling of alienation by the dominant partner following a merger?

A) integration
B) assimilation
C) deculturation
D) separation

Question 7

Why must development programs, like overseas assignments, be put on hold for managers during a merger?

A) Costs are prohibitive during a merger so deferring overseas assignments is a cost-cutting measure.
B) Managers may require additional training to manage the reactions of their employees.
C) Managers cannot hide in another country to avoid being terminated with the merger.
D) It is important that managers be available to work out incentive and reward schemes.

Question 8

What was one of the key factors that resulted in the effective merger Rogers Communications Inc. made with Fido?

A) Rogers ensured no job losses.
B) Rogers set up an intranet site.
C) Rogers paid a premium for Fido.
D) Rogers monitored the merger's progress.

Question 9

According to the textbook, what percent of ALL mergers fail due to the mismanagement of culture?

A) 25%
B) 45%
C) 65%
D) 85%

Question 10

Who are the two parties involved in a vertical merger?

A) buyer and supplier
B) two competitors
C) management and employees
D) shareholders and executives

Question 11

If two competitors merge, what type of merger is created?

A) horizontal
B) vertical
C) linear
D) conglomerate

Question 12

What was the main reason that the merger of Daimler-Benz and Chrysler failed?

A) The companies were rivals and their communication channels never fully opened.
B) The merger was too time-consuming for the companies to worry about operations.
C) The companies were from two different countries and had different corporate cultures.
D) The two types of cars were expensive and inexpensive and consumers could not reconcile this.

Question 13

What is one important benefit that an organization can offer its terminated employees?

A) Access to organizational intranet and email.
B) Continuation of benefits for a certain time period.
C) Incentive plan that incorporates performance.
D) Buy-outs that have cost-of-living adjustments.

Question 14

Following a merger, what is constructive dismissal?

A) When employees are demoted into a position of lesser status and compensation.
B) When employees receive a compensation package that satisfies their basic needs.
C) When employees are terminated using compassionate and sufficient compensation.
D) When employees receive substantially different compensation packages after the merger.

Question 15

If a book publishing company decides to merge with a pulp and paper mill for its paper needs, what type of merger would result?

A) horizontal
B) vertical
C) conglomerate
D) takeover

Question 16

Why must the needs of management be considered as an important motivator for mergers?

A) Managers often consider their power and ego needs ahead of the needs of their organization.
B) Managers are unconsciously motivated by the game of corporate life and takeover challenges.
C) Managers are only concerned about their substantial incentives and salaries and not about their employees.
D) Managers have personality characteristics that result in acquisition behaviours and greed.

Question 17

If a company wants to reduce its dependency on a market that is cyclical in nature, what type of merger strategy should it choose?

A) integration
B) assimilation
C) diversification
D) consolidation

Question 18

What is one benefit for organizations that apply due diligence in order to manage their culture during a merger?

A) lower absenteeism and attrition
B) improved job satisfaction
C) increased stock prices
D) higher revenues and profits

Question 19

Which of the following is NOT a typical employee behaviour category during a merger?

A) not willing
B) not available
C) not able
D) not knowing

Question 20

Why must collective agreements be considered during a merger?

A) To follow the protocols for notification periods for layoffs and terminations.
B) To help management create an environment of trust, fairness, and equity.
C) To ensure that employees will continue to work with the same compensation.
D) To interpret the legalities of downsizing and restructuring.

Question 21

What is the most successful conglomerate in India?

A) Bank of India
B) Bharat
C) VSLN
D) Tata

Question 22

What is one financial benefit of a merger?

A) tax advantages
B) reduced debt load
C) increased stock price
D) higher productivity

Question 23

What is it called when two cultures fuse and evolve into a brand new culture?

A) integration
B) assimilation
C) separation
D) deculturation

Question 24

Typically, mergers and acquisitions do not result in layoffs or the reduction of the size of the workforce.

Question 25

Which of the following is NOT one of the key areas that General Mills' transition team focused upon?

A) Develop the systems that mattered most to employees.
B) Provide fair compensation and incentives to employees.
C) Sequence the implementation of any new systems.
D) Use a climate survey to monitor employee feedback.

Question 26

What are the three primary reasons that companies create mergers?

A) financial benefits; needs of management; human resource benefits
B) financial benefits; strategic benefits; competitive benefits
C) financial benefits; needs of management; strategic benefits
D) global benefits; competitive benefits; human resource benefits

Question 27

According to the textbook, the number and value of acquisitions has yet to peak.

Question 28

How many person-hours did the executives of HP and Compaq spend in planning for the merger integration?

A) More than fifty thousand but less than one hundred thousand.
B) More than one hundred thousand but less than five hundred thousand.
C) More than a half million but less than one million.
D) More than one million.

Question 29

Demotion refers to a reduction of responsibility, territory, or lines of authority for an employee.

Question 30

Horizontal integration is the merger or acquisition of two organizations that have a buyer-seller relationship.

Question 31

Assimilation is when two organizational cultures are fused together to create a new culture.

Question 32

Which one of these factors may influence the success rate of a merger?

A) stress counselling for employees
B) industry sector of the merger
C) both companies should be the same size
D) languages spoken by management

Question 33

Due diligence is a process through which a potential acquirer evaluates a target firm for acquisition.

Question 34

A takeover usually refers to a hostile transaction because it involves acquisition of the company against the wishes of its management.

Question 35

According to the textbook, what percent of firms fail to produce any shareholder value following a merger?

A) 20%
B) 40%
C) 60%
D) 80%

Question 36

Culture refers to the set of important beliefs that members of an organization share.

Question 37

A horizontal merger occurs between a buyer and a supplier.

Question 38

A conglomerate merger is the merger of two organizations competing in different markets.

Question 39

There is strong public opinion against foreign ownership in Canada. What was one acquisition that the federal government recently blocked?

A) acquisition of Potash Inc.
B) acquisition of Inco.
C) acquisition of Petro-Canada
D) acquisition of Intrawest

Question 40

Within what timeframe should the majority of anticipated synergies be captured and identified to ensure the success of the merger?

A) Within the first quarter.
B) Within the first year.
C) Within two years.
D) Within five years.

Question 41

"White knights" refers to a situation where key players have the right to purchase shares at a huge discount, which makes takeovers extremely expensive.

Question 42

List TWO major results of the research surrounding success rates of mergers and acquisitions.

Question 43

Culture can be likened to the social glue that binds individuals together in an organization.

Question 44

Identify and describe THREE HRM impacts that occur as a result of mergers and acquisitions.

Question 45

What is culture? Identify and briefly describe the TWO of the four different types of cultures companies may adopt after a merger or acquisition.

Question 46

Mergers and acquisitions can be classified as corporate restructuring strategies.

Question 47

Researchers have found that there is a tendency for some organizations to dismiss issues related to organizational culture if the numbers from the merger look good.

Question 48

According to researcher David (2009, 169) what are FIVE of the main reasons for the failure of mergers and acquisitions?

Question 49

Identify and describe TWO of the three major benefits of mergers.

Question 50

One main advantage of mergers is to reduce expenses by reducing headcount.

Question 51

In their mergers, typically Canadians want more structure and definition of roles and responsibilities than do Mexicans.

Question 52

When XM and SIRIUS - two satellite radio businesses in Canada - merged, the impact was negligible on the bottom line for XM.

Question 53

Individuals who survive a merger often experience stress, anxiety, and loss of productivity.

Question 54

Pension plans are often the root cause of failed merger deals.

Question 55

When two companies merge, one possible result is the creation of a new compensation system.

Question 56

One of the disadvantages of mergers is that employees might have to re-apply for their old jobs.

Question 57

The success of the valuation-driven acquisition depends on predicting economic cycles.

Question 58

Deculturation describes the feeling of inclusion from the dominant partner in a merger even though the organizational cultures may be different.

Question 59

Some mergers are done without acknowledging the loss of tangible assets like the knowledge of vacating employees following a merger.

Question 60

What is a merger? Identify and describe THREE different types of mergers.