Deck 12: Mergers and Acquisitions

Question 1

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

Answer 1

True

Question 2

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

Answer 2

True

Question 3

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

Answer 3

False

Question 4

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 5

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

Question 6

Mergers and acquisitions can be classified as corporate restructuring strategies.

Question 7

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

Question 8

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

Question 9

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

Question 10

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

Question 11

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

Question 12

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

Question 13

One main advantage of mergers is the lowering of expenses by reducing headcount.

Question 14

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

Question 15

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

Question 16

It is estimated that mismanagement of the culture is responsible for as much as 85 percent of all merger failures

Question 17

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

Question 18

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

Question 19

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

Question 20

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

Question 21

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

Question 22

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

A) developing the systems that mattered most to employees
B) providing fair compensation and incentives to employees
C) sequencing the implementation of any new systems
D) using a climate survey to monitor employee feedback

Question 23

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

Question 24

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 25

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 26

Which of the following is an HR planning issue in mergers that is NOT part of the normal planning process?

A) reduction planning
B) HR due diligence
C) HRIS
D) HR demand estimations

Question 27

Following a merger,what is constructive dismissal?

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

Question 28

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

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

Question 29

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

Question 30

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

Question 31

Which of the following is an HR planning issue in acquisitions that is NOT part of the normal planning process?

A) transition team implementation
B) reduction planning
C) HRIS
D) HR demand forecasts

Question 32

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 33

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 34

What is it called when one company seeks to acquire another company?

A) consolidation
B) conglomerate
C) vertical merger
D) takeover

Question 35

If one company merges with another company but the two companies have no competitive or buyer-seller relationship,what type of merger would result?

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

Question 36

According to the textbook,what percentage of all mergers fail due to the mismanagement of culture?

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

Question 37

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

Question 38

Worker stress levels during M&As may necessitate clearer policies,procedures,and compliance.

Question 39

A horizontal merger occurs between a buyer and a supplier.

Question 40

What are three motives for a company to decide to merge?

A) financial benefits,management needs,and increased resources
B) strategic benefits,management needs,and increased resources
C) strategic benefits,financial benefits,and management needs
D) CEO desires,cost savings,and resource benefits

Question 41

What is one financial benefit of a merger?

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

Question 42

What is it called when two or more companies join together and form an entirely new company?

A) conglomerate
B) vertical merger
C) consolidation
D) horizontal merger

Question 43

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 being the same size
D) languages spoken by management

Question 44

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

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

Question 45

If a company is able reduce costs by a corporate combination,what is this ability called?

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

Question 46

If two competing companies merged to increase market power,what type of merger would result?

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

Question 47

What is usually referred to as operating synergy?

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

Question 48

Merging two workplace cultures is difficult.What is it called when one company absorbs the other?

A) cultural integration
B) cultural pluralism
C) cultural assimilation
D) cultural transformation

Question 49

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 50

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) buyouts that have cost-of-living adjustments

Question 51

What is the most successful conglomerate in India?

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

Question 52

What was one of the key factors that resulted in the successful merger of Rogers Communications Inc.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 53

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 54

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 55

Loblaws purchased Shoppers Drug Mart.What is this an example of?

A) acquisition
B) horizontal merger
C) consolidation
D) acquisition

Question 56

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

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

Question 57

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 58

Merging two organizational cultures is challenging.What is it called when the partner organizations blend current cultures together?

A) cultural integration
B) cultural assimilation
C) cultural transformation
D) cultural pluralism

Question 59

Why must development programs,such as 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 60

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

Question 61

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

Question 62

HR planning in a merger and acquisitions situation has several dimensions that are NOT part of the normal planning process.Describe three HR planning activities that are not part of the normal HR planning process and that an organization would want to include in the merger and acquisition process.

Question 63

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

Question 64

A university and college in the same city decide to merge.What type of benefits do these academic institutions benefit from?

A) strategic and financial benefits
B) cost savings and resource allocation benefits
C) increased federal government grants and funding
D) improved employee and student resources

Question 65

Merging two organizational cultures is challenging.What is it called when the partner companies abandon key elements of their current cultures and adopt new norms?

A) cultural pluralism
B) cultural transformation
C) cultural integration
D) cultural assimilation

Question 66

Early on in a merger,company executives and HR planners have to decide if one culture will be grafted onto that of the other,or if the two will merge to create a third culture.According to researchers,four options are open to organizations involved in M&As.Discuss these four options.

Question 67

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 68

According to researcher F.R.David (Strategic Management: Concepts and Cases,12th edition,2009,page 169)what are five of the main reasons for the failure of mergers and acquisitions?

Question 69

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 70

Merging two workplace cultures is difficult.What is it called when two company partners co-exist?

A) cultural pluralism
B) cultural integration
C) cultural assimilation
D) cultural transformation

Question 71

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

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

Question 72

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

Question 73

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 74

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 concerned only about their substantial incentives and salaries and not about their employees.
D) Managers have personality characteristics that result in acquisition behaviours and greed.

Question 75

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 76

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

Question 77

Identify an organization you are familiar with that is embarking on a merger or acquisition (such as from your work experience or from the course textbook).Discuss the impact of the merger or acquisition on human resources (the impact on the employees).

Question 78

If a real estate agency decides to merge with a real estate developer to achieve the synergies of controlling all factors affecting the company's success,what type of merger would result?

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

Question 79

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