Question 1

Internal product development is often viewed as

Accepted Answer

Internal product development carries a high risk of failure, as it requires significant investment of time, resources, and expertise without any guarantee of success. While it can be a valuable method of generating new products, it is not the only reliable method and may not always be the quickest method of product launch. While it is critical for biotech and pharmaceutical firms, this does not apply to all industries.

Question 2

A primary reason for a firm to pursue an acquisition is to

Accepted Answer

Acquiring another firm can help a firm achieve greater market power by expanding its customer base, increasing its product offerings, and eliminating competition. This can lead to increased profits and a stronger market position. A, C, and D are not primary reasons for a firm to pursue an acquisition.

Question 3

Entering new markets through acquisitions of companies with new products is not risk-free,especially if acquisition becomes a substitute for

Accepted Answer

Acquiring companies with new products may provide short-term gains and access to new markets, but relying solely on acquisitions as a strategy can hinder innovation within the acquiring company. It is important to have a balance of both acquisitions and in-house innovation to ensure long-term success.

Question 4

According to the Chapter 7 Strategic Focus,China's recent approach to acquisitions has been to focus on hard assets (e.g.,mineral deposits or R&D facilities)instead of established branded products because

Accepted Answer

China may have faced challenges in managing and integrating acquired branded products due to differences in business culture and practices. Focusing on hard assets that are less dependent on management expertise and have tangible value may be a more effective strategy for Chinese firms.

Question 5

Cross-border acquisitions are primarily made to

Accepted Answer

Cross-border acquisitions are primarily made to overcome barriers to entry in another country. This helps the acquiring company to gain access to new markets, customers, and resources that would have been difficult or impossible to achieve otherwise. It also allows the company to overcome regulatory barriers, cultural differences, and political risks. Reshaping the firm's competitive scope and reducing the cost of new product development may be some of the other benefits of cross-border acquisitions, but they are not the primary reasons why companies engage in such activities. The higher education levels of labor in developed countries may also be an important factor, but it is not the primary reason why companies engage in cross-border acquisitions.

Question 6

The March 2011 announcement that AT&T was acquiring T-Mobile USA from Deutsche Telekom is a
Acquisition and is intended to

Accepted Answer

The acquisition is horizontal because it involves two companies in the same industry and is intended to increase market power by consolidating their positions. Vertical acquisitions involve companies in different stages of the supply chain and aim to overcome entry barriers or increase diversification. The acquisition is not related to increase speed to market as there is no mention in the scenario of a joint venture for research and development or accessing new technology.

Question 7

Compared to internal product development,acquisitions allow

Accepted Answer

The answer of Compared to internal product development,acquisitions allow
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Question 8

The acquisition of Sun Microsystems (a computer hardware producer)by Oracle Corporation (a software firm)is an example of a(n)

Accepted Answer

The acquisition of Sun Microsystems by Oracle Corporation is an example of a vertical acquisition because Sun Microsystems produces computer hardware while Oracle Corporation produces software. The combination of the two companies' products allows for greater control and efficiency in the production and distribution of computer systems.

Question 9

Cross-border acquisitions are critical to U.S. firms competing internationally

Accepted Answer

Cross-border acquisitions can help U.S. firms overcome entry barriers such as cultural differences, regulations, and competitive landscapes in international markets. By acquiring existing firms in these markets, U.S. companies can gain local knowledge, distribution channels, and established customer bases, which can be difficult to build from scratch. This can give them a competitive advantage and help them expand their operations globally.

Question 10

SpeakEasy,a U.S. software company that specializes in voice-recognition software,wishes to rapidly enter the growing technical translation software market. This market is dominated by firms making highly differentiated products. To enter this market,SpeakEasy would be best served if it considers a(an)

Accepted Answer

Since the technical translation software market is dominated by firms making highly differentiated products, SpeakEasy would be best served by acquiring a highly related firm in the technical translation market. This would allow them to quickly gain access to the necessary technology, expertise, and customer base needed to compete in the market. Additionally, this approach would likely require less time and resources than internally developing the necessary products, and be less risky than attempting a cross-border merger with an Indian or Chinese company. A vertical acquisition of a firm that uses technical translation products may also be beneficial, but may not provide SpeakEasy with the same level of differentiation as an acquisition of a highly related firm.

Question 11

Horizontal,vertical,and related acquisitions to build market power

Accepted Answer

Horizontal, vertical, and related acquisitions can result in a concentration of market power, which can negatively impact competition. As a result, these types of acquisitions are likely to undergo regulatory review and analysis by financial markets to ensure that they do not harm competition in the market.

Question 12

Research has shown that the more______,the greater is the probability that an acquisition will be successful.

Accepted Answer

Research has shown that the more related the acquired and acquiring firms are, the greater the probability that an acquisition will be successful. This is because a high degree of similarity in terms of market focus, technology, resources and organizational structure between the acquiring and acquired firms facilitates integration and synergy realization.

Question 13

When a firm acquires its supplier,it is engaging in a(n)

Accepted Answer

When a firm acquires its supplier, it is engaging in a vertical acquisition, where it seeks to own companies that are part of its supply chain. This allows the firm to have greater control over its supply chain, reduce costs, and increase efficiency. Merger is a combination of two companies into a single entity, unrelated acquisition is when a company acquires a business in a different industry, and hostile takeover is when a company acquires another company against the wishes of its management.

Question 14

When a firm is overly dependent on one or more products or markets,and the intensity of rivalry in that market is intense,the firm may wish to______by making an acquisition.

Accepted Answer

If a firm is overly dependent on one or more products or markets and faces intense rivalry, it may wish to broaden its competitive scope through an acquisition. This will allow it to diversify its product or market portfolio, reducing dependence on any single product or market, and may also help it leverage its strengths in one market to gain advantages in another. Increasing new product speed to market may not address the fundamental issue of overdependence on a single product or market, while increasing economies of scale or overcoming entry barriers may not be as effective in addressing the intensity of rivalry.

Question 15

The presence of barriers to entry in a particular market will generally make acquisitions as an entry strategy.

Accepted Answer

When barriers to entry are present in a market, such as high costs or difficult regulatory requirements, it can be difficult for new companies to compete. In this case, acquiring an existing company that has already established itself in the market may be a more attractive option. Therefore, the presence of barriers to entry make acquisitions more likely as an entry strategy.

Question 16

Manny Inc. recently completed the purchase of its primary supplier. Manny intends to begin expanding the market to which the suppliers' products are sold. This purchase is a(n)

Accepted Answer

The purchase of the primary supplier is a vertical acquisition because Manny Inc. is acquiring a supplier in its supply chain, which allows them to expand the market for the supplier's products.

Question 17

Managers perceive internal product development as a high-risk activity and tend to choose acquisitions because approximately percent of innovations are imitated within 4 years after patents are obtained.

Accepted Answer

The sentence states that "approximately percent of innovations are imitated within 4 years after patents are obtained." The only choice that matches this statement is C, which is 60. Therefore, managers perceive internal product development as high-risk because a vast majority of innovations get imitated within a short time frame.

Question 18

According to the Chapter 7 Strategic Focus,research suggests that emerging market firms tend to-------------
Than other firms and that government ownership of those firms leads to -------------------for the acquisition.

Accepted Answer

Emerging market firms often pay a higher premium for acquisitions due to their desire to quickly gain access to resources and markets, and government ownership can lead to overpayment due to less stringent financial oversight and strategic motivations.

Question 19

A manager in your company is proposing the acquisition of Taylor Company,which has developed a new,innovative product instead of a strategy of developing new products in-house. All of the following arguments are correct EXCEPT

Accepted Answer

The answer of A manager in your company is proposing...

Question 20

Baby Doe's,a designer and manufacturer of children's clothing,has decided to purchase a retail chain specializing in children's clothing. This purchase is a(n)

Accepted Answer

The answer of Baby Doe's,a designer and manufacturer of children's...

Quiz 7: Merger and Acquisition Strategies.